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Abbey to include birthdays and Christmas in affordability checks

Abbey for Intermediaries will now require customers to account for one-off costs such as Christmas in their expenditure assessments.

The lender has changed its expenditure assessment to require all customers to fill out regular and non-regular monthly costs.

Examples given of regular expenditure include utilities, council tax and clothing, while non-regular expenditure covers religious festivals, birthdays, holidays and miscellaneous goods and services.

Abbey says that realistic information must be entered into these boxes and that entering zeros in these fields will lead to a decline decision.

Previously, Abbey would use Office for National Statistics data to obtain an average expenditure for a customer.

The new policy is also in place for Santander’s direct brand.

Abbey is also requiring brokers to submit more information up front, including details of private sales and deposits, which it says will allow it to process cases faster by reducing the number of cases it pends for outstanding information.


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There are 10 comments at the moment, we would love to hear your opinion too.

  1. They used to be the lender of flexibility and realistic underwriting?! I have 3 cases with them at the moment where the underwriters seem to be looking for ways to decline, returning to me for more and more documents. Do Abbey want to lend anymore ?? These recent change in criteria will prevent me using them for many more cases. It feels like a fundamental shift in their mandate for new business volumes? has their been a shift in there focus for mortgage business at Santander I wonder…?

  2. Presumably therefore any Jehovah’s Witnesses will be automatically declined, as they do not observe birthdays or Christmas.

  3. Regulation is behind this.

  4. Atheist or not, I’ll bet most join in some sort of Winter festival celebration – and this type of expense should be taken into consideration. It’s all very well saying that this expense comes out of income that clients choose to spend, but when the chip are down, they spend it anyway. In addition, expenses such as holidays and birthdays, which are much more extravagant than they used to be, can absorb a substantial chunk of income – and so does servicing the debt that is often created.
    It’s not just about whether or not Abbey or Santander wish to write new business or not, but whether, in the long term, they will achieve repayment without having rely on their security. Let’s not forget that it was irresponsible lenders (and mortgage advisers) who were at least partly responsible for the mess we are in today.
    I never thought I would hear myself say this, but well done Santander! Sadly, though, I fear that their stance will put them at a competitive disadvantage – unless, of course, the FSA were to step in and make such a requirement compulsory – which naturally they won’t.

  5. Nanny State, Nanny FSA and now Nanny lenders. Or should it be Ninnies?

  6. I haven’t taken a holiday for the last few years because we live in the lake district and I’ve stayed at home. Does that now make holidays compulsory for mortgage applications? Too little too late Abbey!

  7. Who is to say what average is, sorry but when it comes to things like Christmas and Birthdays the variances are colossal, as a family we now only give to the children in the family, and at most only a token gift to the adults, some people get an upgrade of their mobile phone every 6 months, some eke it out for years on the same model, these items are discretionary, some people scour the charity shops or make gifts, as they may prefer to spend their money on other things or save for a rainy day. So long as after the essentials are realistically serviced, and there is a margin for savings and emergencies, I have had these items on my individualised budget planner for years, and know how wide the variations are. Just as some will shop in Marks and Spencer for everything, others may be growing their own veg etc.

  8. And what exactly is the problem with this? Affordability is supposed to take account of living costs, and guess what……borthdays and Christmas are living costs! Many people routinely spend £2K of their post-tax income on Xmas (and presumably a similar amount on various birthdays) so it’s entirely sensible to take account of this.

    Oh dear, another prop taken out from under the bloated housing market….I can see why mortgage brokers don’t like it! Don’t worry, all lenders will be competing to find new excuses to restrict lending….

  9. I’d be amazed if this is a commercial decision Nor does it have anything to do with the affordability (or perceived/theoretic lack of it) or the housing market which is one of the engines that drives recovery

    I fear the long and interfering arm of regulation and the MMR.

    Stand by for RDR mark 2.

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