Outgoings have been driven up in recent months due to the continued rise in energy bill prices. This additional cost could potentially affect a customer's ability to pay a mortgage.
HSBC is considering imposing stricter affordability tests on borrowers in response to the rising cost of living.
Outgoings have been driven up in recent months due to the continued rise in energy bill prices, which could potentially affect a customer's ability to pay a mortgage.
A global crisis in the supply of natural gas is responsible for the increased cost of energy bills over the last few months.
The chief executive of Energy UK said that bills could rise by as much as 50% in the spring, when Ofgem will review its energy price cap. It currently sits at £1,277.
Colin Bell, chief operating officer and co-founder of Perenna, said: “It's sensible that big lenders like HSBC are considering more stringent affordability tests in the context of increasing energy costs.
Related: The latest HSBC mortgage rates for the UK
"However, this could have harmful consequences on the most vulnerable customers’ opportunity to refinance. In the worst possible scenario, we could see an increase in mortgage prisoners who end up overpaying for their mortgage while at the same time facing higher energy prices.
"Lenders will need to factor in higher energy prices, rising inflation and rising interest rates when looking at a consumers’ affordability, which will make mortgage deals harder to secure in 2022 compared to 2021.
“Issues like this are why Perenna is looking to introduce mortgages with fixed monthly payments for up to 30 years. Mortgage repayments are often the highest monthly cost a homeowner faces and protecting them against the cost rising is really important.
"There's no reason to risk uncertainty, end up on SVR, or overpaying on a mortgage. Homeowners should have this type of security when it comes to mortgage repayments, in order to stay in control of their finances.
"Long term fixed rate mortgages may also give people the actual funding they need, despite rising bills, as the mortgage itself does not need to be stressed for future interest rate rises.”
