New analysis from mortgage adviser Alexander Hall has revealed that homebuyers across England are set to benefit from an average £41,000 increase in mortgage affordability, following changes in lender policies and government intervention.
The research compared the maximum borrowing available under the previous 4.5 times income rule with new 5.5 times income thresholds being adopted by many lenders.
Based on the average income in England of £40,954, the maximum mortgage available has increased from £184,294 to £225,248 — a boost of £40,954.
The gains are even more pronounced in higher income regions. In London, where the average homebuyer earns £54,245, the increased affordability translates into an extra £54,245 in potential borrowing, bringing their maximum mortgage from £244,103 to £298,348. Similar improvements were found in the South East (£44,464), East of England (£42,679), and South West (£36,125).
The easing of income caps follows regulatory adjustments, including the Government’s permanent extension of the Mortgage Guarantee Scheme and the raising of lender flow rate rules from £100m to £150m in new residential lending, allowing smaller lenders greater flexibility.
In response, lenders including Skipton, TSB, Coventry, Nationwide, Accord, and Lloyds Banking Group have introduced more generous affordability criteria.
Stephanie Daley, director of partnerships at Alexander Hall, said: “Affordability has long been one of the biggest barriers for homebuyers, particularly in high-cost areas like London, where house prices have outpaced income growth.
“The recent reforms and lender changes have significantly improved what’s possible for many buyers, especially those who were previously unable to gather a large deposit or qualify for a mortgage.
“While there’s still work to be done to address housing supply and planning issues, these changes will open doors for many homebuyers who now have more choice and flexibility in securing their homes.”
