Martin Lewis warns cost of living crisis could affect people applying for mortgages this year
Martin Lewis has warned that the cost of living crisis could have an impact on people applying for mortgages this year. Speaking on the latest episode of his podcast, ‘Ask Martin Lewis Podcast’ on BBC Radio 5 Live, the founder of MoneySavingExpert.com had a grim message about buying a house.
He was asked if the current cost of living crisis would impact anyone’s creditworthiness, and he confirmed that it would if you did something that had a negative effect, such as missing payments, changing your way of paying or if you pay late. things.
But he also pointed out that mortgage applications are an area of concern to him, reports The Daily Record. He explained: “One of the things that concerns me, for example, is that when you apply for a mortgage, one of the most important things they do is an affordability check – it’s not coming from your credit report, it’s coming from them assessing affordability.
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Martin described how an affordability test is done based on disposable income, not your credit rating, score or creditworthiness.
He said: ‘When people tell me about the problem with student loans in your credit report, I say, ‘it’s not in your credit report, but it affects your financial capacity’ because if you repay your loan student, it means you have less disposable income.
“The same goes for a cost of living issue, if all your costs go up, you have lower disposable income, less room to pay the mortgage, and as a result, you’ll find it harder to spend the affordability test – not the credit test – unless you defaulted or had a credit problem.”
So far this month, millions of households across the UK have seen their energy bills rise following the implementation of Ofgem’s latest price cap on April 1. National Insurance (NIC) contributions have also risen by 1.25 percentage points, meaning take home pay for workers will be lower.
Most utilities have also increased their monthly subscription costs. And last week, rapidly rising food and fuel prices propelled inflation to a new 30-year high of 7% in March, even before energy bills soared. The Office for National Statistics (ONS) said the figure was linked to food and fuel prices – petrol at 160.2p a liter on average in March and diesel at 170.5p, were all two of the record prices.