New credit tests are going to be imposed by the main UK banks to assess the likelihood of a customer defaulting on payments. If a customer is seen as a high risk, they will then be forced onto an expensive variable rate deal which could leave them out of pocket by hundreds of pounds per month.
The tests will produce a forecast that will analyse how likely a customer is to fail to repay by looking at their monthly income and how many times they have re-mortgaged. This will be another blow for young first time buyers who may be on low salaries than according to these tests mean that they will have to move to a more expensive deal.
The move by the banks is another sign of their trepidation in returning to normal in a post credit crunch market. Since the squeeze began Banks have been self-preserving themselves and these tests will ensure that they only do good deals with customers guaranteed to pay them back- a far cry from the days of sub prime lending.
Lucy Trueick
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