AT least two major banks have announced a change to their mortgage rules which could benefit thousands of customers.
The change affects homeowners who are living in buildings with cladding.
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Lloyds Banking and NatWest have announced they will be scrapping EWS1 certificates for those who are living in blocks of flats in England that are five floors or taller.
This will see the mortgage providers ditch lending.
An EWS1 certificate grants a certain rating after high-rise properties have had an External Wall Fire Review – without this certificate, most banks won’t offer the homeowner a mortgage.
The change has been made since new guidance was published by the Royal Institution of Chartered Surveyors (RICS) on how to assess properties for fire safety.
Jas Singh, chief executive of consumer lending at Lloyds Banking Group, said: “We have worked closely with housebuilders and RICS to find a solution for homeowners, so we warmly welcome the updated guidance for valuers on homes with external cladding.
“While we have continued to lend on properties with cladding where possible, this move will really simplify things for those buying homes in properties five storeys or above (11m).
“We hope this will continue to open up the market for those with affected properties, bringing peace of mind to homeowners.”
The changes will come into place from January 9, 2023.
It means residents will be able to apply for government funding to fix cladding issues if their building is over 11 meters high.
Santander added that it’ll “consider mortgage applications in England on properties in buildings irrespective of the building’s height or whether remediation work has commenced, provided the correct evidence is shared”.
A Barclays spokesperson said: “As a responsible lender, we continually monitor our processes and documentary requirements to ensure they are fit for purpose.
“We are changing our policies to support the Building Safety Act, following the recent Government announcement, and we will launch these changes in early 2023.”
The Sun also asked HSBC whether they are planning to announce changes, and we’ll update this story when we know more.
It comes as revised fire safety rules after the Grenfell Tower disaster left people in properties with cladding unable to sell.
According to MoveWise, safety tests can take between 12 and 18 months and can cost as much as £45,000.
After Grenfell Tower, residents could take out loans capped at £50 a month, or £600 a year to fix issues, but you’ll need to check with your local council if you can get something similar.
The news comes as the Bank of England interest rates have risen to their highest level in 14 years this month.
The rate has gone up by 50 basis points from 3% to 3.5%, as expected.
It’s the ninth time in a row that the BoE has raised interest rates to try and tackle soaring prices.
It follows the biggest single hike from 2.25% to 3% in November.
The move will make the cost of borrowing, including loans, credit cards and mortgage repayments more expensive.
But the hike is good news for savers as they may get better rates on their nest egg.
High-street banks use the BoE base rate to work out the interest rates it offers to customers.
It means millions of households face higher mortgage bills – but the BoE’s outlook for the economy has improved.