Santander follow up with big changes to their mortgage lending criteria. As of now, some borrowers will be able to take out the largest loans in history!
New loan-to-income regulations
The bank has revised its loan-to-income guidelines. Today, some married couples are able to take on nearly a quarter more debt! We are seeing lenders modify their own lending practices in light of recent regulatory guidance. Interestingly, this move is part of an overall trend in the industry.
Opposition withstanding, under the new rules Santander will allow those on bigger salaries with less money to put down on a property to borrow more. For instance, a couple with an £80,000 deposit would get a mortgage of £687,500. This results in a very sizable marginal tax rate decrease from the previous upper limit of £556,500, when one partner is earning £75,000 and the second £50,000. This surge makes it easier for first-time buyers to affordably boost their purchasing power.
Santander has recently introduced some truly game-changing improvements! At all LTVs, now applicants with a combined income of £100,000 or more can borrow 5.5 times their income. Yet to lock in these terms, borrowers still need to put down at least 10% of the property’s value. For some couples who are applying for a mortgage through Santander, their potential borrowing amounts may increase. They can stand to benefit up to £130k almost instantly!
David Morris, Santander’s head of homes, emphasized the implications of these changes, stating that 2025 is “quickly becoming the ‘year of the buyer’” as the bank aims to facilitate access to larger mortgages. He added that these adjustments are designed to “hopefully help more would-be buyers access the money they need to buy the home of their dreams.”
The adjustments at Santander align with recent guidelines issued by the Bank of England, which allow lenders to offer more high loan-to-income mortgages. As the UK’s Financial Conduct Authority noted, many lenders’ existing affordability tests aren’t aligned with those new policy guidelines. This dangerous misalignment deserves immediate focus. Consequently, most banks and building societies have done the same, relaxing their lending requirements over the last few months.
Santander’s recent decision bucks that trend among other lenders. It just so happens to be the only program that enables higher earners with lower deposit amounts to receive larger loans. Aaron Strutt of Trinity Financial characterized this novel approach as unique in today’s lending environment. Some lenders have been loosening their “stress test” requirements. These rules ensure that mortgage payments will remain affordable even after interest rates are allowed to return to more typical levels.