Clydesdale Bank and Virgin Money have announced a key change to their affordability assessments for residential mortgage applications, significantly improving maximum borrowing potential for many customers.
The move sees a reduction in the stress rate applied to loans where the product is either variable or fixed for less than five years. It is expected to increase the amount clients can borrow, as both banks aim to approve more applications under the revised criteria.
The precise uplift in borrowing will vary depending on individual circumstances, income and expenditure. However, in a representative example, a couple with a joint income of £85,000 could now see their maximum borrowing increase by up to £40,000. For higher-income clients — the core focus of the Clydesdale Bank lending proposition — the uplift could be even greater.
This change reflects a broader trend in the mortgage market, where lenders are seeking to support borrowers through improved affordability metrics amid a gradually stabilising interest rate environment.
Both Clydesdale and Virgin have updated their affordability calculators to reflect the new stress rate policy, and intermediaries are being encouraged to run client scenarios through the revised tools to assess the impact.
A spokesperson for the group noted that “every customer’s situation is different,” urging brokers to review the updated calculators to determine what level of borrowing might now be possible.
