Santander, another major UK mortgage lender, recently released very favorable revisions to its borrowing policy. These changes are intended to provide increased, affordable mortgage options for more customers across the credit spectrum. Some of these changes are supposed to help improve the affordability of homeownership. They will let first-time borrowers get an extra £35,000 for their new homes. We anticipate this effort will have a profound impact on first-time buyers as well as existing customers who are looking for more money.
The bank has introduced a new five-year fixed-rate mortgage product. Currently, a dual-income couple making £63,500 per year can only borrow a maximum of £305,326. That’s an almost £21,000 boost compared to earlier borrowing caps. Santander has further eased its stress testing requirements, taking up to 0.75 percentage points off the rate. In order to ensure affordability, the bank checked payments at 1 percentage point above their usual standard variable rate of 6.75%. Today, it determines affordability in a range from 6% to 7%.
For instance, first-time buyer couples with a combined income of £49,500 will be able to take advantage of these changes. They can now afford to borrow £210,352 at a two- or three-year fixed-rate mortgage. That’s nearly £14,000 more than the former caps. These changes are further indication that Santander is recommitting to recalibrating its affordability calculations so more customers can flex their borrowing limits.
“Helping customers achieve their home ownership dream is a key priority for Santander, but we know that affordability constraints continue to bite.” – David Morris
We hope that new lending rules will make it a lot easier for first-time buyers to buy their first home. These changes will give current mortgage borrowers more borrowing options. Santander is relaxing its lending requirements. Besides fairing better in economic downturns, expanding housing production planes neighborhoods for those who have seen homeownership consistently remain a step out of reach.
David Hollingworth commented on the potential impact of these changes, noting that it could provide a much-needed boost for prospective buyers who require higher borrowing amounts. He further underscored that loan-to-income caps will remain in place. This measure will borrow on affordability only so far, preventing over-borrowing to those already demonstrating strong affordability.