Lenders have welcomed reports that regulators are considering relaxing mortgage rules to allow more first-time buyers into the housing market.

This could see banks loaning more cash to buyers at high loan-to-income ratios and affordability tests widened to include rental payments rather than simply income, according to The Times.

Perenna chief executive Arjan Verbeek says: “If the reports are right, we may finally be seeing regulators and government alike wake up to the fact that too much regulation can also damage consumer outcomes, rather than support them — and in doing so, undermine growth. The mortgage market is a case in point.”

The move comes after Chancellor Rachel Reeves summoned key regulators to a meeting yesterday to hear their ideas on how they plan to cut business burdens in a bid to boost UK growth.

Watchdogs at the first of regular meetings included the Competition and Markets Authority, the Environment Agency as well as business secretary Jonathan Reynolds.

One area that is expected to be explored are stress-testing rules that limit how much FTBs can borrow.

Currently mortgage lenders are only allowed to lend 15% of their total mortgage “loan book” to people whose property is worth 4.5 times their annual salary.

Another is to include evidence of previous rental payments of FTBs in their affordability tests rather than just income.

Lenders are also understood to be pressing the Bank of England to reduce the amount of capital they need to keep in reserve for 90% loan-to-value mortgages to further open up the market.

Reeves said that some of the ideas put forward by regulators were “promising”, but she wanted to see “greater ambition and urgency to drive economic growth.”

UK Finance director of mortgages Charles Roe told the paper: “Reviewing the mortgage lending rules would help with affordability issues, not just for FTBs but those looking to move further up the housing ladder.”

The latest figures show that mortgages in arrears accounted for just 1.08% of all outstanding homeowner mortgages. Mortgage arrears and repossessions are well below levels seen after the financial crisis in 2008.

The Financial Conduct Authority released a letter to the Chancellor, dated yesterday, saying it wanted to “collaborate with you in a fundamentally different way to support the growth mission”.

On home loans, the City watchdog’s chief executive Nikhil Rathi said it would “begin simplifying responsible lending and advice rules for mortgages, supporting home ownership and opening a discussion on the balance between access to lending and levels of defaults”.

He added the body would also “consult on removing maturing interest-only mortgage and other outdated guidance” and “work with government to remove overlapping standards” such as the Mortgage Charter.

Perenna’s Verbeek adds: “The Bank of England should be commended for assessing what changes it could make based on where the market is today.  If we want to build a nation of homeowners, it is critical to regularly review and revise regulations that whilst protecting the system from risk, stop the market from serving credit-worthy FTBs.

“The loan-to-income flow cap sticks out like a sore thumb. It acts as a handbrake on today’s mortgage market, stopping credit from reaching those who will benefit from it most.”

Bluestone Mortgages head of sales & distribution Mark Hollands says: “We welcome the Chancellor’s interest in tackling the challenge of affordability for FTBs. For too long, lending rules have been too restrictive, making getting onto and up the property ladder out of reach for many, if they can afford the monthly repayments.

“We would like to see greater collaboration between the government and the mortgage industry to support the root causes of the housing crisis.

“This includes easing the affordability pressures that prospective buyers face as well as providing innovative solutions that help buyers get onto the property ladder.”