Mortgage blog: Student debt to be included in tough new mortgage checks

Posted 12 June 2014

Young people looking to get onto the property ladder could find it even tougher after the UK's financial regulator confirmed that student debts should be taken into account by mortgage lenders. The Financial Conduct Authority has stated that student debts should now be considered by lenders following the introduction of strict new affordability rules this April.

With many students leaving university with tens of thousands of pounds worth of debt, getting onto the property ladder could become even more difficult.

Recent advice had suggested that student debt would not be taken into account when calculating how much someone could borrow. However, the FCA has now confirmed that graduates will have their student loan debts included in the affordability calculation for a mortgage.

The Mortgage Market Review guidelines will force all mortgage lenders to consider student loans as a ‘committed expenditure', reducing the amount they are prepared to lend.

Halifax, Britain's biggest mortgage lender, confirmed student debts are now looked at. A spokesman said: "As part of the MMR changes we do now take into consideration student loans for new mortgage applications."

The news comes after a number of applicants have claimed lenders have used intrusive questioning during their mortgage interview. Some applicants have reported that they have been asked whether they eat steak, whether they play golf and if they plan to start a family.

A spokesman for the Building Societies Association said: "Under the new MMR rules, student loans are certainly considered to be committed expenditure and will be included as part of the affordability assessment. We would urge all borrowers with student loans to be responsible, realistic and reduce their debt elsewhere as much as possible if they are thinking of applying for a mortgage."

The news means that those graduates who have left university in the last few years and who paid higher university fees could now find that their plans are in jeopardy.

Keith Osborne, editor of, said: "Lenders have to take any regular financial commitments into account when deciding how much they are prepared to lend. Now that student debts are to be taken into consideration then it stands to reason that any recent graduate with debt is going to find it tougher to get the mortgage that they need.

"The new mortgage rules have already made it more difficult for young people to get onto the property ladder. Including student debts is only like to make the problem worse for thousands of our brightest and most highly qualified people."


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