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Mortgage Stress Test Easing Boosts First-Time Buyers and Property Values

Lenders have started easing mortgage stress tests following the Bank of England’s March guidance change to expand borrowing power.

Overview

  • The Bank of England’s March guidance shift allows lenders to test mortgages against lower projected rates than the standard variable rate plus 1%.
  • Major lenders including Santander, Lloyds Bank, Nationwide and Halifax have revised their stress-test rates, unlocking up to £25,900 of extra borrowing for typical first-time buyer couples.
  • Savills forecasts that increased lending capacity could push average first-time buyer deposits down from £58,000 to around £45,000 over the next five years.
  • Analysts warn that stronger demand may drive UK house prices up by 5–7.5% by 2030, potentially adding as much as £19,425 to the cost of the average home.
  • The Financial Conduct Authority is urging continued flexibility in lending assessments and the government has reaffirmed its commitment to supporting homeownership.