Santander Reduces Mortgage Stress-Test Rate, Expanding Borrowing Limits

The UK lender's move, effective today, allows borrowers to access loans up to £35,000 higher, marking a pivotal response to recent regulatory guidance.

• Santander has lowered its mortgage stress-test rate to 6-7%, down from 1 percentage point above its standard variable rate of 6.75%.
• This change enables borrowers to potentially secure loans between £10,000 and £35,000 more, depending on individual circumstances.
• The move follows Financial Conduct Authority (FCA) guidance encouraging flexibility in lending to support homeownership and economic growth.
• Experts suggest other lenders may follow Santander's lead due to competitive pressures, though concerns about increased mortgage defaults remain.
• Stress-testing rules, introduced in 2015 to prevent financial instability, are being reassessed amid falling Bank of England base rates and evolving economic priorities.

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