Higher lending limits from big lenders will give a major boost to mortgage borrowing power as regulators review post-crisis rules designed to curb household debt.
An increasing number of Britain’s biggest mortgage lenders are offering loans worth at least six times a borrower’s income, in what is a significant shift in lending policy as banks respond to political and regulatory pressure to support home ownership.
A number of high street lenders now allow applicants to stretch to income multiples that would have been rare a decade ago, reversing the cautious approach that became embedded in the market post the 2008 financial crisis. It means higher-earning households can now secure substantially larger mortgages, particularly when borrowing at moderate loan-to-value ratios.
NatWest is among the latest institutions to expand its multiplier limits. Applicants earning above £75,000 and joint applicants with a combined income exceeding £100,000 can now access mortgage loans above six times salary at up to 75 per cent loan-to-value. That’s up from previous caps, which were closer to 5.5 times income.
Additional headroom can make a big difference
According to the bank’s own illustration, a borrower earning £75,000 can increase their maximum loan by £37,500, from roughly £412,500 to £450,000. For buyers facing high deposit hurdles and elevated house prices, that additional headroom can make the difference between securing a property and being priced out.
There are now a total of eleven lenders offering similar income multipliers, including four of the big six – Barclays, HSBC and Nationwide Building Society and HSBC’s Premier customers — who must either earn £100,000 or hold equivalent savings and investments — can borrow up to 6.5 times income.
The changes come on the back of increasing pressure on affordability. Data from the Office for National Statistics shows the typical home in England costs 7.7 times the average annual salary in 2024, and in Wales, the figure was 5.9%. The widening gap between earnings and prices has pushed lenders to reconsider how tightly they apply income caps, particularly for borrowers with strong credit profiles.
Rivals face pressure to match them
Aaron Strutt of mortgage broker Trinity Financial told the Times that when leading institutions raise their thresholds, rivals often face pressure to match them or risk losing business from borrowers who need larger loans to complete purchases.
He describes the recent changes to lending criteria as “transformative for households” trying to enter the market, arguing that cheaper headline interest rates are of limited use if the loan size on offer is not sufficient to buy the intended property.
The four big lenders that have expanded their income ratios account for 46 per cent of new UK mortgage lending in 2024 (UK Finance). Which means the changes are likely to quickly ripple through the rest of the market.
Government keen to encourage credit flow
The government has been very keen to encourage credit flow into the housing market, hoping that better access to mortgages will support first-time buyers and stimulate economic activity. Yet the loosening also revives concerns over the safeguards introduced after 2008 to prevent excessive household leverage.
Since 2016, Bank of England rules have restricted income multipliers above 4.5 times income to 15 per cent of annual originations. Last summer, the Bank launched a review of that cap and will now allow lenders to apply for temporary flexibility, provided the industry-wide average remains within the threshold.
At the same time, many lenders have reduced their mortgage stress tests following guidance from the Financial Conduct Authority. Lenders must test whether borrowers can still meet repayments if interest rates rise, so the easing of these requirements has expanded eligibility.
The Bank is expected to consult on potential revisions to the 15 per cent limit during the first half of this year, while the FCA is preparing its own consultation on lending standards in early 2026. Lucian Cook of upmarket estate agency, Savills, says regulators are likely to weigh any further easing carefully, balancing the desire to increase first-time buyer activity against the stabilising role mortgage stricter lending rules played during the recent spike in mortgage rates.
