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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.

The estate agent Savills has calculated that prices could rise by 5 per cent by 2030 in response to increased demand
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Relaxed borrowing terms will also cut the deposit amount for first-time buyers (Photo: Chris Griffiths/Getty)

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.