New mortgage rules could add £19,000 to average house price and help first-time buyers with lower deposits
Scroll down to find out what is happening with mortgage rates
HOME LOAN New mortgage rules could add £19,000 to average house price and help first-time buyers with lower deposits
NEW mortgage rules could add £19,000 to average house prices and help first-time buyers get on the ladder with lower deposits.
Changes to stress testing practices could cause property prices to increase by between 5% and 7.5% over the next five years, claims Savills.
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House prices could surge by up to 7.5% over the next five years, Savills said
Credit: Getty
New research by the estate agent also predicts the average deposit needed by a first-time buyer could fall from £58,000 to as little as £45,000 over the same time frame, The Telegraph reports.
Lucian Cook, of Savills, said: 'Change would not be immediate, with the impact on house prices and transactions likely to take place over a period of five years.
'But in the medium to long term, the market would feel the knock-on effect of a widening pool of buyers."
In March, the FCA reminded lenders they are allowed to tweak their stress testing based on market expectations.
It said the market approach to stress testing could be restricting borrowers' access to affordable mortgages.
It comes as mortgage interest rates fall, following drops in the Bank of England (BoE) base rate.
Stress tests are carried out by lenders to see if borrowers could cope with an uptick in their interest rate or if their income dropped.
A host of lenders, including Halifax, Santander and Barclays, have tweaked their stress tests in recent months.
Santander said it could allow home buyers to borrow up to £35,000 more.
But relaxing stress testing rules, while making it easier for buyers to get a mortgage, could see house prices rise as demand increases.
The Sun's James Flanders explains how to find the best deal on your mortgage
What is happening with mortgage rates?
Mortgage rates have been falling steadily across the UK following a number of Bank of England (BoE) base rate cuts.
Trump's "Liberation Day" blitz of tariffs also led to a number of lenders slashing interest rates below 4%.
The base rate is the rate the BoE charges to high street banks and lenders when they borrow money.
If it goes up, it means mortgage rates tend to rise too, as well as savings rates. When it falls, it sees the opposite happen.
The base rate currently sits at 4.25%, having been lowered from 4.5% earlier this month, and down from 5.25% in summer last year.
According to Moneyfactscompare.co.uk, the average two-year fixed-rate mortgage is 5.12% today, compared to 5.93% a year ago.
The average five-year fixed residential mortgage rate today is 5.09%. This is down from 5.50% a year ago.
More base rate cuts are expected this year.
It's worth bearing in mind, when your mortgage rate falls is dependent on the type you have.
Those on tracker and standard variable rate (SVR) mortgages tend to see their rates fall first.
However, if you're on a fixed rate, you won't feel the impact of any rate changes until your deal ends.
If you are coming to the end of a fixed deal, most lenders let you lock in a new rate up to six months beforehand, which can be worth doing.
If rates fall after you agree a new deal, some lenders will let you sign a new one at a lower rate.
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