Borrowers took out bigger mortgages in May after several high street lenders relaxed their loan limits, research from Stonebridge found.
The average mortgage size rose by over £11,500 to £205,882 between April and May.
This came as lenders changed their stress testing, allowing people to borrow more.
As a result, repayments made up 38.9% of the average borrower’s salary in May, compared to 37% in April.
This happened even as wages edged up 0.45% and mortgage rates fell slightly to 4.47%.
Rob Clifford, CEO at Stonebridge, said: “Mortgage sizes jumped significantly in May as borrowers took advantage of lending criteria changes from several high street lenders.
“It was pleasing to see wages edging higher and mortgage rates dipping, but those gains weren’t enough to offset the impact of consumers choosing to borrow more, pushing repayments to nearly 39% of the average salary.
“The big question now is whether this marks a temporary uptick in borrowing and cost or a more lasting shift in how much borrowers are prepared to take on.”
Clifford added: “If it’s the latter, we could be entering a phase where higher borrowing levels become the norm, with long-term affordability stats reflecting that choice – after all, this affordability change isn’t driven by rates rising but by consumer behaviour following regulatory changes.”
“With more lenders raising LTI caps and easing affordability rules, brokers are seeing renewed momentum in the market, particularly among higher earners and professionals, who now qualify for larger loans.
“That’s opening the door for conversations with customers who may have held back earlier in the year.”
He said: “This is a real opportunity for brokers to re-engage, revisit pipeline cases and add value by helping customers understand what’s now possible.”
