Return of bumper sized mortgages as banks loosen rules
Aspiring homeowners can now borrow much more after banks raised the cap on mortgage sizes. Lenders have begun to relax affordability rules for borrowers after tightening them last year amid worries over the economy's health.
High street banks including NatWest, Lloyds and HSBC will once again offer mortgages worth five times a borrower's yearly salary, while Santander and Barclays now lend up to 5.5 times an applicant's income.
For most of last year borrowers were only eligible for loans worth up to 4-4.5 times their income.
This means home buyers will now be able to qualify for much bigger loans. A couple with a combined income of £60,000 would be able to borrow up to £330,000 rather than £240,000, for example.
Banks' easing of affordability criteria is the latest sign the mortgage market is opening back up after a year of restrictions. Hina Bhudia of Knight Frank Finance said the vaccine roll out had made lenders more confident.
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According to analysts at Moneyfacts, there are now 518 deals available for borrowers with a 15pc deposit, up from the 323 available six months ago. Meanwhile, the number of deals for buyers with a 10pc deposit has climbed from a low of 48 in August to 277 today, though this is still significantly less than the 779 deals available in February 2020.
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High street lender TSB cut rates on its low-deposit deals last week however, suggesting banks are becoming more relaxed about lending in this area. Banks are also beginning to consider bonuses once again when assessing whether a borrower can afford a mortgage.
Though traditionally an acceptable form of income when applying for a home loan, some lenders refused to take bonuses into account last year when assessing affordability.
Restrictions remain in place for self-employed workers, who in some cases are having to find a 40pc deposit to qualify for a loan.
Aspiring homeowners can now borrow much more after banks raised the cap on mortgage sizes. Lenders have begun to relax affordability rules for borrowers after tightening them last year amid worries over the economy's health.
High street banks including NatWest, Lloyds and HSBC will once again offer mortgages worth five times a borrower's yearly salary, while Santander and Barclays now lend up to 5.5 times an applicant's income.
For most of last year borrowers were only eligible for loans worth up to 4-4.5 times their income.
This means home buyers will now be able to qualify for much bigger loans. A couple with a combined income of £60,000 would be able to borrow up to £330,000 rather than £240,000, for example.
Banks' easing of affordability criteria is the latest sign the mortgage market is opening back up after a year of restrictions. Hina Bhudia of Knight Frank Finance said the vaccine roll out had made lenders more confident.
...
According to analysts at Moneyfacts, there are now 518 deals available for borrowers with a 15pc deposit, up from the 323 available six months ago. Meanwhile, the number of deals for buyers with a 10pc deposit has climbed from a low of 48 in August to 277 today, though this is still significantly less than the 779 deals available in February 2020.
...
High street lender TSB cut rates on its low-deposit deals last week however, suggesting banks are becoming more relaxed about lending in this area. Banks are also beginning to consider bonuses once again when assessing whether a borrower can afford a mortgage.
Though traditionally an acceptable form of income when applying for a home loan, some lenders refused to take bonuses into account last year when assessing affordability.
Restrictions remain in place for self-employed workers, who in some cases are having to find a 40pc deposit to qualify for a loan.
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