Homebuyers across England are set to benefit from a substantial increase in purchasing power, with new analysis from mortgage adviser Alexander Hall revealing that relaxed affordability rules could leave the average buyer over £41,000 better off.

The shift follows a wave of regulatory reform and lender policy changes that have begun to dismantle long-standing barriers to mortgage borrowing. Central to this development is a move by many lenders to raise the maximum income multiple from 4.5 to 5.5 times salary, following adjustments to affordability flow rate rules and renewed government support for the housing market.

Under the previous lending limits, a buyer with the average English income of £40,954 could borrow up to £184,294. With the new 5.5x income cap increasingly available, the same buyer could now access £225,248 – an increase of £40,954.

The impact is most pronounced in regions where incomes are higher and affordability has traditionally been stretched. In London, where the average homebuyer earns £54,245, the increased borrowing capacity rises by £54,245 – from £244,103 to £298,348.

The South East, East of England and South West also show substantial gains, with mortgage potential up by £44,464, £42,679 and £36,125 respectively.

GOVERNMENT INTERVENTION

This improvement in affordability has been partly driven by the government’s decision to make the Mortgage Guarantee Scheme permanent, encouraging lenders to support higher loan-to-income lending by protecting them against potential defaults.

Further support has come from reforms to lender flow rate rules, which now exempt the first £150 million of new residential lending from strict LTI caps – up from the previous £100 million. The change is expected to boost flexibility particularly among building societies and smaller lenders.

Stephanie Daley, director of partnerships at Alexander Hall, said the measures could be transformative for many aspiring buyers.

“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,” she said. “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.”

Mainstream lenders have responded quickly. Skipton Building Society has increased its loan-to-income multiple to 5 times salary on its track record mortgage, which does not require a deposit. TSB and Coventry Building Society have both reduced their affordability stress tests, enabling customers to borrow £30,000 and £35,000 more respectively.

Nationwide has also eased restrictions, cutting minimum income thresholds for its ‘Helping Hand’ mortgage – a product that allows buyers to borrow up to 6x their income with just a 5% deposit.

Meanwhile, Accord has expanded its ‘Boost’ range to include 5.5x income loans for applicants earning £50,000 or more. Lloyds Banking Group, including Halifax, has committed a further £4 billion to its own FTB Boost range, supporting borrowing at the new 5.5x threshold.

While the changes stop short of addressing the UK’s broader housing shortage or streamlining the planning system, Daley believes the immediate impact on buyer confidence and access is clear.

“These changes will open doors for many homebuyers who now have more choice and flexibility in securing their homes,” she said.