Lloyds Banking Group, which owns Halifax, has eased affordability calculations among its lenders for homebuyers and remortgagers, adding that typical households will now be able to borrow an extra £38,000.
Halifax, BM Solutions, Bank of Scotland and Lloyds Bank say stress rate calculations on products on five-year terms or longer, will be lowered.
This will apply to first-time buyer, home mover and remortgage applications.
The group says: “Typical customers may see increases around 13% in the maximum loan available, for a family that could be in the region of £38,000.”
It adds that this example covers two adults, with two dependents, with a household total income of £75,000, on a 25-year mortgage term, with typical credit commitments.
Last month, Santander said it would also lower its mortgage stress testing, meaning that some customers could borrow between £10,000 to £35,000 more.
Head of Halifax Intermediaries Amanda Bryden says: “It is always a careful balance when calculating whether a loan is affordable both now and in the future.
“While they are just one part of measuring affordability responsibly, the application of these new stress rates means a typical family could potentially borrow over £38,000 more and make it easier to turn their dream home into a reality.”
Trinity Financial product and communications director Aaron Strutt calls the move from Halifax “a significant change”.
Strutt adds: “Current tight mortgage affordability stress tests are a real issue meaning that many potential borrowers are being told they cannot afford mortgages when they probably can.
“Santander recently made similar affordability changes, which means other lenders will probably ease their lending rules as well.
“There are lots of schemes helping FTBs and higher earners to get more generous mortgage loan sizes, but in many cases, families struggle to borrow the amount they need.
“Many lenders want to issue more generous loan sizes, but the affordability rules have made it difficult. The new government has clearly changed something.
“Banks and building societies offer different income multiples depending on the applicant’s income and expenditure.
“As a rule, it is possible to borrow between four and six times single or joint salaries.”
The moves from these lenders come after the Financial Conduct Authority said last month that lenders have been “too cautious” in granting FTB home loans under current rules.
FCA chief executive Nikhil Rathi told the Treasury Committee in March 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.
