Relaxed mortgage rules could boost first-time buyer (FTB) transactions by up to 24% over the next five years, according to Savills.
The changes follow Bank of England guidance in March, which said lenders no longer need to stress test borrowers at the standard variable rate plus 1% if they take a fixed rate for less than five years.
Savills compared mortgage costs as a percentage of income under the old and new stress test rules.
Savills assumed between half and three-quarters of the extra borrowing power would be used to buy a more expensive home or would be reflected in higher house prices.
Additionally, Savills said more relaxed lending is likely to bring more buyers into the market, which could push up house prices depending on how much new housing is built.
The research found that FTB transactions could rise by 47,000 in a scenario with higher house price growth, or by up to 80,000 if price growth is lower.
This would mean an increase of 14% to 24%.
House prices could increase by an extra 5.0% to 7.5% above existing five-year forecasts.
Lucian Cook, head of residential research at Savills, said: “Relaxed lending rules will certainly change the course of travel for the housing market in the medium to long term, but there will be a strong interplay between the extent to which house prices and first-time buyer transactions increase.
“The more increased borrowing capacity impacts prices, the less impact there will be on transactions.
“Change would not be immediate, with the impact on house prices and transactions likely to take place over a period of five years.”
Cook added: “The current uncertain economic outlook is likely to hold back buyer confidence and willingness to take on substantially more debt in the short term.”
“But in the medium to long term, the market would feel the knock-on impact of a widening pool of buyers.
“This will be good news for housing delivery but it’s unlikely to be enough to allow the government to hit its housebuilding targets.”
