TSB has become the latest lender to ease its mortgage stress test, allowing customers to borrow up to £30,000 more when buying their home.
The lender says the move includes first-time buyer applications, and sees the stress rate of interest for all residential applications cut by up to 2% to 6.75%, or product rate plus-1% if higher.
It expects this will boost affordability on a typical joint application by around £30,000, based on a joint income of £75,000 at 90% loan to value.
The bank has increased the loan-to-income multiple on mortgage lending for self-employed customers earning over £75,000.
It says self-employed customers earning between £75,000 and £100,000 can now borrow up to five times their income for mortgages with a loan-to-value of 85% or lower.
Also, self-employed customers who earn £100,000 or more can now borrow up to 5.5 times their income for mortgages with a loan-to-value of 85% or lower. This is an increase from 4.49 times income.
Earlier today, Coventry for intermediaries also eased its mortgage stress test, giving typical borrowers the chance to borrow up to £35,000 more when buying their home.
In recent months, Santander, Leeds Building Society, Barclays, and Nationwide among others, have also eased their affordability rules to allow tens of thousands of pounds of extra borrowing for first-time buyers, home movers and remortgagers.
The moves from these lenders come after the Financial Conduct Authority said in March that lenders have been “too cautious” in granting FTB home loans under current rules.
Financial Conduct Authority chief executive Nikhil Rathi told the Treasury Committee that under existing regulatory rules, lenders have a degree of “flexibility” over the stress tests they apply to homebuyers coming to the market for the first time, which they have not exercised.
TSB secured lending director Craig Calder says: “At TSB, we know that homeownership can feel out of reach for some, but these small changes are really important ones that will boost affordability and open the door for more people to get on the property ladder.”
