Scrapping loan-to-income flow limits could bring thousands of first-time buyers into the property market, according to Mortgage Broker Tools.

Currently, the Bank of England imposes an LTI flow limit on lenders, which caps the number of mortgages they can write at or above 4.5 times salary to 15% of new mortgage lending. 

But the criteria search platform says its own data shows that 54% of FTBs asked for loans above 4.5 times salary this year, and 58% of these cases were considered to be affordable. 

It adds: “The majority of these applicants were able to demonstrate the affordability required to borrow a loan size at least 10% larger than the loan they had requested.”

The study comes after the Bank removed its 3% mortgage affordability test last month to simplify regulations, adding that the LTI 4.5 times salary cap acts as a stronger affordability safeguard.

Mortgage Broker Tools Tanya Toumadj says: “The plight of FTBs has been well publicised, with continued house price inflation over recent years making it harder for hopeful homeowners to save a deposit and demonstrate affordability.

“Lenders are increasingly taking a data-driven approach to assessing affordability and the recent removal of the mandatory 3% stress test, will give them some room to innovate and develop new products that could help first-time buyers and home movers.

“Our data shows that the removal of the LTI flow cap that is currently imposed on lenders is one option that could make homeownership more accessible to first-time buyers, many of whom are otherwise able to demonstrate good affordability.

“There is clearly a lot of demand for this approach from customers. However, simply removing the LTI flow limit may not be the right option, particularly in the current environment.”