Hodge is making criteria enhancements to its later life mortgage products on 9 October.

The lender said it is making the changes in response to affordability issues.

The changes include:

• Increasing income multiples on a purchase and remortgage on later life products – with capital raising from 4.49 to 5 times for interest only and from 4.49 to 5.5 times on repayment;
• Reducing the stress rate for pound for pound remortgages;
• A reduction in living costs to reflect the reduction in the energy cap from 1st October;
• Accepting a life insurance policy to support affordability under the death stress test.

Louise Swainston, head of mortgage risk at Hodge, said: “Affordability continues to remain a challenge for mortgage customers across the market as interest rates remain high and the cost of living continues to rise.

“To help support our intermediary partners and their customers meet affordability hurdles, we have factored the news of the decrease in the OFGEM energy price cap into our affordability assessment, as well as reducing our stress rates for like for like remortgage borrowing.

“We have also increased our loan to income caps to 5 times for interest only lending and 5.5 times on repayment, and for pound for pound remortgage borrowing we continue to lend up to six times income on our Later life product range. Also, we will now consider a life insurance policy in our affordability assessment. This will support customers who fail the death stress allowing us to assess affordability based on the policy covering or partly covering the loan in addition to their personal income.”

Emma Graham (pictured), business development director at Hodge, added: “We have developed this package of supporting criteria enhancements to help customers, particularly those who are looking to remortgage, with any affordability issues in mind. In particular, we believe the relaxation of the stress testing will be beneficial to many customers at a time when they need it the most.

“Our later life products allow for debt consolidation and assess interest only mortgages on an interest only basis. So as a lender, we believe we are doing all we can to help our intermediaries navigate the affordability challenge they are facing at the moment.”