Mortgage blog: Why it may become harder to get a home loan in 2014

Posted 29 January 2014 by Keith Osborne

Experts are warning that changes to the mortgage industry in the UK are set to make it tougher to be approved for a home loan in 2014. April sees a raft of changes to the rules governing the mortgage industry which many experts believe will make it more difficult to get a mortgage and which could push up the cost of borrowing.

Here, we look at some of the reasons why you might find it harder to be approved for a mortgage in 2014.

Lenders will be forced to assess affordability more strictly than ever before

New rules created by the Financial Conduct Authority come into force in April and have been designed to protect borrowers and to prevent risky lending by banks and building societies. However, the Guardian reports that "the change will extend the process of taking out a mortgage and reduce the amount borrowers can raise".

Keith Osborne, editor of, explains: "From April, lenders will have to delve more deeply into your household expenditure than ever before. As well as outlawing ‘self certification' mortgages, these changes are also likely to reduce the amount that you can borrow. The focus will move from lending based on a multiple of your income to lending based on what a bank thinks you can afford.

"In addition, lenders are going to be force to ‘stress test' applications more rigorously. This means that you won't just have to prove that you can afford the initial mortgage payments but that you will also be able to afford them if interest rates were to rise."

Paul Broadhead, head of mortgage policy at the Building Societies Association, adds: "This means when speaking to a lender or mortgage broker about their mortgage needs borrowers should be prepared to answer questions about their monthly income and outgoings.

"This may include the costs of travelling to work, childcare, other household bills including energy costs, and details of any loans and credit cards that will continue after the mortgage is taken out. The new rules may mean some borrowers find they can borrow less than they might have expected in the past."

Cost of borrowing set to rise

As well as becoming more difficult to get a mortgage, the cost of home loans is also set to rise following the rule changes.

Osborne adds: "The cost of implementing the new regulations is likely to make the cost of borrowing more expensive. Lenders are likely to have to raise rates or fees in order to help pay for higher staff costs and to meet the expense of changing the way in which they underwrite mortgage applications."

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