Propertymark’s position
A balanced approach to affordability is something we have long called for – one that supports access to the market without encouraging risky lending. In various responses to consultations and through our engagement with policymakers, we’ve highlighted the impact of affordability assessments, particularly on first-time buyers.
We continue to monitor developments across the lending sector and will keep members informed about how changes like these may affect the market.
Propertymark 2024 Spring Budget representation
Our pro-growth solution to tackle challenges the housing sector is experiencing has been sent to HM Treasury which focuses on increasing supply in the private rented sector, will boost home ownership, and generate momentum in the wider property market.
What’s changing?
Santander has two key changes to the affordability assessment. The first one is stress test rates have been reduced by up to 0.75% meaning monthly repayments will be affordable at a lower assumed interest rate and, secondly, income calculations have been adjusted. All this is aimed at boosting the amount some borrowers can access, particularly those on lower or middle incomes.
For example, under the new rules, a first-time buyer couple earning £49,500 a year could now borrow up to £14,000 more. A couple earning £63,500 could be eligible for around £21,000 more on a five-year fixed deal.
Why now?
Earlier this year, the FCA stated that mortgage lending rules should be reviewed to avoid unfairly limiting access to homeownership. In response, lenders have reassessed policies which had become tighter due to interest rate rises and economic uncertainty.
These changes are intended to strike a better balance – helping more people onto the housing ladder while maintaining responsible lending standards.
What this means for agents
This move by Santander may make it easier for some buyers to secure the borrowing they need, potentially unlocking transactions that were previously out of reach. It could also help increase market activity, among first-time buyers, and movers.
Agents may start to see more optimistic clients because of greater access to finance. Staying informed about changes to lending criteria is important to help guide buyers to professional mortgage advice. Propertymark has produced a consumer guide to mortgages which can be shared with clients to explain how property finance works and what buyers should consider.
Mortgages explained
Mortgages are a loan used to cover the overall cost of a property purchase. This guide covers everything you need to know, and how to find one that works for you.
