Mark Harris
Chief Executive
Hardly a day goes by without another lender reducing its mortgage rates for new purchases and remortgages. Falling Swap rates, which underpin the pricing of fixed-rate mortgages, mean sub-4% mortgage rates have become more readily available in the past couple of weeks, with a number of lenders offering borrowers several choices at this level. This is great news for hard-pressed borrowers who have been struggling with higher rates in recent months.
However, while these rate reductions are grabbing all the headlines, what has passed under the radar is something potentially even more important, as several lenders have also tweaked their affordability guidelines. As mortgage and reversion rates fall, aligned to the way lenders stress any borrowing request, this has resulted in borrowing boundaries being redrawn, resulting in more positive outcomes for borrowers.
Santander is one of a number of lenders which has recently tweaked its affordability guidelines. The lender announced that all residential affordability rates were reduced by up to 0.75 per cent, bringing them to the lowest levels since 2022. Santander added: “In real terms, this means that many customers applying for a residential mortgage from Santander UK can now borrow between £10,000 to £35,000 more than [before the changes were implemented], depending on their individual circumstances and subject to affordability checks and loan to income limits.”
It is not just Santander who has made such changes although others have not been quite as explicit when it comes to the exact detail. Lending institutions across the board from large high-street banks such as NatWest to building societies and specialist lenders have adjusted their affordability assessments downwards, resulting in applicants being able to borrow greater amounts. It potentially means that tens of thousands of pounds in extra borrowing potential is now available to mortgage customers, bringing that home ownership goal increasingly within reach.
As always, it is worth speaking to a whole-of-market broker such as SPF Private Clients if you need to take out a mortgage or refinance. Our advisers will not only know which lenders offer the best rates but also the most attractive terms when it comes to affordability, ensuring you get the best mortgage for your circumstances.
