Will tougher mortgage affordability rules lead to consumer cutbacks

 Under new rules introduced by the Financial Conduct Authority, those applying for a mortgage can now be quizzed on all their outgoings – including how much they spend at the hair salon. Borrowing will now be based on how much applicants have left after regular expenditure, rather than on their income, and lenders will have to check that people can still afford repayments if interest rates rise. Responding to news, National Hairdressers’ Federation chief executive Hilary Hall said: “The new mortgage affordability rules being brought in by the Financial Conduct Authority are, at one level, sensible and responsible. A mortgage is a large financial commitment – the biggest financial decision most consumers make – and so people need to be realistic about what they can afford, and banks need to ensure they are lending responsibly. “But the recent Beautiful Britain survey has calculated that the average cost for a woman’s haircut is just £23, with men’s spending around just £12. Even adding in extras such as having some colour done or beauty treatments or buying after-care products, we’re not talking huge sums of money. “One of the beauties of hairdressing is that it allows people even on tight budgets to feel good about themselves. During the recession we saw clients cutting back, both on what they spent in salons and the frequency of their visits. “Now things are beginning to recover we’d hate to see what appear to be quite intrusive questions by lenders deterring people from visiting their local salon. Lenders do need to look carefully at affordability, but when it comes to relatively small purchases such as haircuts, consumers should be left to decide for themselves what they can and cannot afford.”