A MAJOR mortgage lender has made a big change to its rules that will help more people get on the housing ladder.
has made changes to its affordability rules that means buyers will be able to borrow more.
UK surged to a new record high this month, meaning are having to stump up even more to get on the ladder.
The average asking price for a home hit £377,182 in April, according to the latest data from .
But more mortgage lenders are moving to help first-time buyers with schemes to make buying a home more affordable.
At the same time, two major have cut their mortgage rates below 4% in another boost for buyers.
Halifax has now reduced the stress rates used in its standard affordability calculation and on its five-year fixed by 0.5%.
Stress tests are used by mortgage lenders to check whether buyers could still afford the loan if interest rates were to increase by a certain amount.
If the stress rates are reduced, buyers and home movers will be able to borrow more than they can currently.
Halifax said the change means customers could see a rise of about 15% to the maximum loan available.
In practice, a typical household of two adults with two children and a income of £75,000 could borrow £38,000 more.
How much extra you can borrow will depend on factors like your income.
Halifax has also reduced the minimum stress rate for two-year fixed like-for-like remortgages.
It's the latest lender to ease stress tests and improve affordability for first-time buyers.
was the first big name to make the move last month, reducing all of its stress test rates by 0.75% and bringing them to the lowest level since 2022.
It said borrowers would be able to take out loans between £10,000 and £35,000 more than previously.
Brokers have reacted positively to the news and said now is a great time for first-time buyers.
Ranald Mitchell, director at Charwin Mortgages, told Newspage: “With 90% and 95% mortgages hitting a 17-year high, it's clear the market is waking up to the needs of first-time buyers with the latest move from Halifax being a prime example.
“Lenders are innovating, competition is booming and homeownership is back on the cards for those who thought it was out of reach.
“We're entering a new era of mortgage lending and it's about time.”
Meanwhile Sean Horton, managing director at Respect Capital, said the increased borrowing capacity means fewer first-time buyers will have to compromise on location or property size.
Lenders start price war on mortgage rates
Brokers also told Flying Eze last week that now is an thanks to mortgage rates dropping.
Major lenders Santander and are among the banks that have cut fixed mortgage rates to below 4%.
Santander has reduced the two, three, and five-year fixed rates in its home mover range by up to 0.13%.
The two-year fix is now set at 3.97% and the three-year fix at 3.99%.
For first-time buyers, all two, three and five-year fixed rates between 60-95% LTV will be reduced by up to 0.17%.
HSBC today reduced rates on almost all of its mortgages by up to 0.24%.
It also launched a new sub-4% five-year fixed rate at 60% LTV for Premier customers.
This follows and Coventry Building Society cutting their rates to below 4% last week, in what appeared to be the start of a mortgage price war.
What schemes are there to help first-time buyers?
Several lenders currently have schemes that are also aimed at helping first-time buyers.
Ben Perks, managing director at Orchard Financial Advisers, said mortgages “have never been friendlier”.
“There are products available now for people with low deposits, poor credit and those nearing retirement,” he said.
“The bottom line is, lenders are really keen to lend and they're looking at more ways to do so. If they continue to innovate, the future is bright for borrowers.”
For example, – the first to launch in the UK since 2008.
It's aimed at renters who have struggled to save a deposit, although those hoping to get this mortgage offer can only borrow the equivalent of or less than what they spend on rent each month.
Accord has a mortgage that on properties valued up to £500,000.
It was recently extended to include those wanting to buy a flat.
Plus, ‘s Helping Hand scheme allows first-time buyers to borrow up to six times their income when taking a five or ten-year fixed rate up to 95% loan-to-value.
