New warnings over mortgage imprisonment as lenders tighten borrowing

For free real time breaking news alerts sent straight to your inbox sign up to our breaking news emails Sign up to our free breaking news emails Sign up to our free breaking news emails SIGN UP I would like to be emailed about offers, events and updates from The Independent. These figures are used to determine how much an applicant can comfortably afford to consistently repay under their current circumstances, but also to test whether their financial circumstances could withstand changes like interest rate rises. Nor do they factor in “the estimated 1.93 million people who have become mortgage prisoners in England, rejected by lenders when trying to remortgage and unable to sell their homes because of the cladding crisis following the Grenfell disaster”, notes Myron Jobson, senior personal finance analyst for interactive investor, an investment platform. “While it is widely accepted that the updated ONS data feeding into lenders’ affordability models should see the amount they offer to lend fall, there is a potential knight in shining armour coming to the rescue in the form of the regulator”, says Scott Taylor-Barr, financial adviser at Carl Summers Financial Services. “One of the controls the regulator placed on lenders following the global financial crisis and credit crunch was enforcing the rate at which these affordability models were stress testing applicants on shorter term deals; typically at around 5.5-6.99 per cent, but there is talk of this enforced rate being removed.