Average buyer can now borrow over £40,000 more, study reveals
Recent changes to government policy and lender criteria have increased the amount homebuyers in England can borrow, according to new research from mortgage adviser Alexander Hall.
The brokerage’s analysis found that the average homebuyer, earning £40,954, could previously access a mortgage of £184,294 under the standard 4.5 times income cap. With many lenders now offering a 5.5 times income multiple, the borrowing limit rises to £225,248—an increase of £40,954.
The impact is most pronounced in London, where the average buyer earning £54,245 can now borrow up to £298,348, £54,245 more than under the old rules. Other regions, including the South East, East of England, and South West, have also seen notable increases in maximum borrowing, with gains of £44,464, £42,679, and £36,125 respectively.
These changes follow the government’s decision to make the Mortgage Guarantee Scheme permanent, providing lenders with protection against potential losses and encouraging greater support for buyers. In July, the threshold for mandatory loan-to-income caps was raised from £100 million to £150 million in new residential lending, a move that primarily benefits smaller lenders and building societies.
In response, several major lenders have eased affordability criteria. Skipton has raised its loan-to-income multiple to five times on a track record product, which does not require a deposit. TSB and Coventry have reduced affordability stress tests, allowing customers to borrow up to £30,000 and £35,000 more, respectively. Nationwide has lowered minimum income requirements for its ‘Helping Hand’ range, offering up to six times income at 95% loan-to-value, while Accord has expanded its ‘Boost’ range to include 5.5 times income multiples for those earning £50,000 or more. Lloyds Banking Group, including Halifax, has allocated an additional £4 billion to its FTB Boost range, supporting borrowing at 5.5 times income.
“Affordability has long been one of the biggest barriers for homebuyers, particularly in high-cost areas like London, where house prices have outpaced income growth,” said Stephanie Daley (pictured), director of partnerships at Alexander Hall. “The recent reforms and lender changes have significantly improved what’s possible for many buyers, especially those who were previously unable to gather a large deposit or qualify for a mortgage.
“While there’s still work to be done to address housing supply and planning issues, these changes will open doors for many homebuyers who now have more choice and flexibility in securing their homes.”
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