Britain’s biggest mortgage lender has relaxed its lending “stress test” limits to make it easier for borrowers to raise more to buy their dream home.
Halifax said that from this week it is “making changes to our mortgage affordability calculations meaning many customers will be able to borrow more. Typical customers may see an increase of around 13% in the maximum loan available. “
The Lloyds owned lender gave as an example a couple with two children with a combined income of £75,000 could see the amount they can borrow increase by £38,000. This assumes a 25% deposit, a 2 year mortgage product and 25 year term.
Aaron Strutt, product and communications director at brokers Trinity Financial, said: “ This is a significant change from Halifax that will make it easier for people to borrow more money to get on the property ladder, remortgage, or move home.
“The current tight mortgage affordability stress tests are a real issue meaning that many potential borrowers are being told they cannot afford mortgages when they probably can.
“Santander recently made similar affordability changes, which means other lenders will probably ease their lending rules as well.
“There are lots of schemes helping first-time buyers and higher earners to get more generous mortgage loan sizes, but in many cases, families struggle to borrow the amount they need.
“Many lenders want to issue more generous loan sizes, but the affordability rules have made it difficult. The new government has clearly changed something.”
The move comes as a number of major lenders cut their leading rates below 4% again.
Today HCBC became the latest big name to rejoin the sub-4% club with a 3.99% remortgage rate, a five year fix for premier customers only with a £999 fee.
On Thursday last week, Barclays became the first “big six” lender to cut the cost of some new fixed-rate deals to below 4%, after similar announcements by some smaller players.
The Co-operative Bank said it will be relaunching its mainstream and buy-to-let mortgage ranges tomorrow. It said it would be reducing rates on new two- and three-year fixed deals for homebuyers by as much as 0.26 percentage points
