"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"
- Stephanie Daley - Alexander Hall
New research from mortgage adviser Alexander Hall shows that homebuyers in England stand to benefit by more than £41,000 on average due to recent government reforms and changes in lender policies easing affordability constraints.
Alexander Hall reviewed average income figures for buyers across English regions and compared the maximum mortgage available under the previous 4.5 times income cap to the increased borrowing potential at 5.5 times income, which many lenders now offer following regulatory relaxation.
Previously, an average buyer earning £40,954 could borrow up to £184,294. With the updated 5.5x income multiple more widely accessible, the average mortgage rises to £225,248, a £40,954 increase in purchasing power.
This improvement is even clearer in London, where the average homebuyer with an income of £54,245 can borrow an additional £54,245, raising the potential mortgage from £244,103 to £298,348.
Other regions such as the South East, East of England, and South West also see significant boosts, with buying power rising by up to £44,464, £42,679, and £36,125, respectively.
These changes are supported by the government’s permanent extension of the Mortgage Guarantee Scheme, which protects lenders against future losses and encourages them to offer more support. Additionally, in July, lender flow rate rules were adjusted, increasing the threshold for mandatory loan-to-income caps from £100m to £150m in new residential lending. This particularly benefits smaller lenders and building societies.
In response, some mainstream lenders have introduced more flexible affordability terms. For example, Skipton raised their loan-to-income multiple to 5x on their track record product, requiring no deposit.
TSB and Coventry have eased affordability stress tests, enabling customers to borrow an extra £30,000 and £35,000 respectively. Nationwide reduced minimum income requirements for its ‘Helping Hand’ range, which offers up to 6x income at 95% loan-to-value (LTV), while Accord expanded its ‘Boost’ range to provide 5.5x loan-to-income for those earning £50,000 or more.
Lloyds Banking Group, including Halifax, has allocated an additional £4bn to its FTB Boost range, supporting borrowing at 5.5x income multiples.
Stephanie Daley, director of partnerships at Alexander Hall, noted, “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."
"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.”
