Leeds Building Society is reducing the stress rates it applies when assessing mortgage affordability, in a move that could see typical borrowers eligible to borrow up to £34,000 more.
The change follows clarification from the Financial Conduct Authority on how stress testing rules should be applied and is intended to widen access to homeownership.
From Friday 27 June, the mutual will lower affordability stress rates by as much as 1.24%. The revised assessments will apply to owner-occupier borrowers across purchase and remortgage applications and are expected to particularly benefit first-time buyers and families seeking to move up the housing ladder.
A typical single first-time buyer earning £38,000 would now be able to borrow £184,000 — £9,000 more than previously — while a single parent earning £75,000 and looking to remortgage could borrow £334,000, up £34,000 on prior limits.
Andy Moody, chief commercial officer at Leeds Building Society, said: “We welcome the recent clarification on lending rules by the FCA which will allow us to support more people onto and up the property ladder and support the government’s plan for growth.
“Stress testing requirements have unduly held some borrowers back from achieving their home ownership aspirations, so we are pleased to be able to lend up to £34,000 more to our customers as a result of these changes in affordability assessments.
“We continue to implement prudent affordability checks to allow us to continue lending responsibly, as we have done for the past 150 years.”
The update follows the launch of the lender’s Income Plus range earlier this year, which enables borrowers with a household income of at least £40,000 to access borrowing of up to 5.5 times their income.
