stress testing mortgage

[mumarooni]

Hello wealth of mortgage and property experience and knowledge!

FTB here. When we look at our budget, we can afford projected mortgage payments while also putting a little into savings each month (15% of income across pensions and other savings)

I see that mortgage lenders no longer have to stress test to ensure you can afford the mortgage if there was to be a 3% interest rise at the end of your fixed term.

But it also seems wise to do your own stress test to some extent - and I see advice that lenders do still stress test to 1% rise.

What do you think is a reasonable stress test to do in the current climate, with higher rates?

I'm thinking it is likely we will go for a 5 year fix - just for the security - and it seems like so much could have changed in the next 5 years with costs of living etc that any sort of stress test seems a bit arbitrary and not good enough.

And, does the stress test mean you wouldn't have to adjust your spending at all in order to afford the higher rate - as there are ways we could tighten our belts - spend less on leisure, or put less away in savings, in order to adjust if rates changed, would this count as failing or passing a stress test? Is the idea that you wouldn't have to change a thing in order to afford a higher rate?

Just trying to work out how resilient our plans our before we jump in to this home owning malarkey

Thanks!

The last stress test I was put through was only on non discretionary spend, so they presumed if things got tough I wouldn't go on Safari in Africa and could cancel some subscriptions, they were more interested in council tax, utilities, transport to work, childcare etc. If you think you are likely to get promoted at work/get a new job on better pay elsewhere in the next 5 years that won't help the official test but may help you make up your mind. We stretched ourselves at 28, at 40 this feels quite comfortable.