Thousands more borrowers set to get on housing ladder as lending rules relaxed

Lenders are now allowed to offer thousands more high loan-to-income (LTI) mortgages at 4.5 times or more of a borrower’s annual salary, making it easier to get a bigger mortgage. In a significant move, the UK’s two regulators, the Financial Conduct Authority (FCA) and the Prudential Regulation Authority (PRA), are now allowing smaller lenders to lend up to 15% of their total mortgage lending to high LTI borrowers, capped at £150m. Previously, these lenders were restricted to a cap of £100m, a figure set in 2014 that had not kept up with the UK’s economic growth.

This move will mean that, working with our lenders, we can offer improved affordability loans for all our customers, especially first-time buyers. This group, which represents over 30% of all loans in the market, will see access to a greater number of mortgages, being allowed to stretch their income further while still meeting strict lending criteria. This is also an ideal opportunity for borrowers whose fixed-rate mortgages are coming to an end to get a more affordable mortgage deal than before, with many more lenders able to offer loans under the new rules.

Enzo Mora, CEO and founder of The Mortgage Brain, comments: “This is an excellent opportunity to lend more flexibly and competitively, and we’re delighted to see lenders including the Nationwide and industry commentators such as the Building Societies Association welcoming the move. It’s a win-win situation for first-time buyers struggling to get on the ladder and younger movers who often need 5x their salary to buy a property to access more loans. It will also help the house building industry and the UK’s economic growth.”

While this move benefits smaller lenders, a number of larger lenders are also offering great deals on 95% mortgages for both first-time buyers and second steppers buying a pre-owned home and new build properties. We advise customers to speak to our mortgage teams, who can access a wide range of affordable mortgages, often exclusive to The Mortgage Brain.