People with car finance are now eligible to borrow thousands more than they could six months ago, following changes in affordability assessments driven by updated FCA guidance, analysis from Coventry Building Society revealed.
In March, a single buyer – earning the average UK salary – would see their mortgage borrowing cut by over £18,000 if they had a £345 car payment.
Now that same car payment takes just £5,000 off their maximum borrowing, allowing them to borrow nearly £13,000 extra for their home.
Joint buyers – both earning the average salary – would have seen their maximum borrowing cut by over £13,000 in March if they each had a £345 car loan.
Now their borrowing will be reduced by £5,677.
The shift follows updated guidance from the Financial Conduct Authority (FCA) which gives lenders more flexibility in their affordability assessments.
The FCA’s reforms are part of a wider strategy to make homeownership more accessible.
Jonathan Stinton, head of intermediary relationships at Coventry Building Society, said: “Just a few months ago, a typical car payment could reduce borrowing power by over £18,000 – that could mean people had to compromise on space, location, or put the brakes on their move altogether.
“Now, thanks to regulatory changes, that impact has dropped to around £5,000. It’s a big shift, and it gives borrowers more flexibility to balance lifestyle choices like car ownership with their homebuying goals.
“That said, a car payment still affects how much clients can borrow—it’s just not the deal-breaker it used to be. Brokers can help clients navigate these changes to make more informed decisions, especially when remortgaging or adjusting terms.”
