Santander UK has become the first major lender to reduce its residential mortgage affordability rates following recent guidance from the Financial Conduct Authority (FCA), allowing many homebuyers and remortgagers to borrow significantly more.
The bank has reduced all residential affordability rates by up to 0.75 percentage points, bringing them to their lowest level since 2022.
The move comes in direct response to the FCA’s call earlier this month for lenders to ensure their affordability assessments better reflect the current economic environment and customers’ real borrowing potential.
BORROW MORE
In practical terms, the changes mean that many prospective borrowers could now be eligible to borrow between £10,000 and £35,000 more than they could previously, depending on individual circumstances and subject to affordability checks and loan-to-income limits.
David Morris, head of homes at Santander UK, said the lender is focused on easing the challenges faced by buyers in the current market.
He explained: “Helping customers achieve their homeownership dream is a key priority for Santander, but we know that affordability constraints continue to bite.
“We’re thrilled to be the first major lender to respond to the updated FCA guidance, alongside introducing a range of reduced mortgage interest rates today, fulfilling our role as a responsible lender while helping more customers to borrow what they need to release their home aspirations.”
The FCA’s updated expectations urged lenders to ensure affordability testing reflects “a fair balance between risk and access,” particularly as interest rates fall from the highs seen in 2023.
