Big change to card payments set to alter way all shoppers pay at tills
In what could be a significant change to the way shoppers handle transactions at checkouts, it has emerged that the £100 contactless card payment limit in the UK could be scrapped. The financial watchdog hinted at the potential upgrade, suggesting it could "remove the £100 contactless limit" to grant consumers "greater flexibility" during their purchases.
Over time, the limit for contactless payments has repeatedly increased, initially rising to £20 in 2012, then jumping to £30 in 2015, and most recently ascending to £100 in October 2021.
Typically, there isn't a cap on how many contactless charges one can rack up within a single day, but frequent usage might prompt a PIN request. Following inquiries from the Government regarding possible measures to stimulate economic expansion, the Financial Conduct Authority (FCA) acknowledged its intent to examine the rules surrounding contactless transactions further.
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Adding to the prospective regulatory reforms, the FCA also disclosed the likelihood of loosening mortgage criteria, which may assist countless first-time homebuyers in climbing onto the property ladder. Presently, lenders face restrictions enforcing that no more than 15% of all their mortgages are comprised of loans that surpass 4.5 times the annual income of the buyer.
Such limitations could be relaxed shortly, potentially enabling individuals, especially those with modest earnings, to borrow heftier amounts assuming they can manage the repayments. Discussions are also said to be ongoing concerning affordability assessments designed to ensure borrowers can maintain repayments even in the event of an unexpected surge in interest rates, reports the Mirror.
Paying rent on time could soon be taken into account when applying for a mortgage, as regulators are reviewing the current affordability rules. According to The Times, this potential change is welcomed by Rightmove mortgage expert Matt Smith, who stated: "It is really encouraging that the market regulators are now considering what a review of mortgage affordability could look like.
"Regulatory change is what we've been calling for, as that is what is needed to truly impact home-mover affordability, particularly for first-time buyers. We've seen some innovative products and schemes announced by lenders to try and do their bit to support home-buyers, but they need support from both the government and regulators to really drive more options for people."
However, Richard Donnell, executive director of research at Zoopla, expressed concerns about finding the right balance: "The big question is whether current rules go too far but there is a risk for consumers and the government in how far this might go. Finding the balance not easy and is compounded by the huge north-south divide in affordability."
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