Day: May 31, 2025

Clydesdale Bank and Virgin Money have become the latest lenders to ease their home loan stress rates, allowing customers to borrow around an extra £40,000.   The banks say the new rules apply to variable or fixed-rate residential mortgages for terms under five years. They explain that a typical example of joint borrowers with a combined income of £85,000, can expect to see their maximum borrowing rise to up to £40,000.   The group adds that for higher earning borrowers — for which Clydesdale Bank is more suited — “the increase in maximum borrowing can be proportionately higher”.  Earlier this month, Barclays relaxed its affordability calculations which it said on average would allow customers to borrow almost £31,000 more. Nationwide, NatWest, Lloyds Banking Group, Santander, Hodge and Accord Mortgages are among several lenders that have eased their stress tests to allow more borrowing in recent weeks. The moves from these firms come after the Financial Conduct Authority said in March that lenders have been “too cautious” in granting FTB home loans under current rules.  Financial Conduct Authority chief executive Nikhil Rathi told the Treasury Committee that under existing regulatory rules lenders have a degree of “flexibility” over the stress tests they apply to homebuyers coming to the market for the first time, which they have not exercised.  John Charcol mortgage technical manager Nicholas Mendes says: “Banks are allowing borrowers to stretch their finances further because the regulatory environment has shifted.  “In response, many lenders have adjusted their stress testing, meaning borrowers can now access larger loans based on their actual affordability rather than artificially inflated scenarios.   “For some, particularly first-time buyers with stable incomes, this could be the change that allows them to finally get on the housing ladder.”  But Mendes adds: “The Bank of England’s long-standing cap on high loan-to-income lending – the 15% rule – remains in place. Introduced over a decade ago to limit systemic risk in the wake of the financial crisis, it now sits awkwardly alongside stricter stress testing and more robust capital requirements.   “As a result, there’s a tension — while more borrowers now qualify under the updated affordability criteria, lenders are constrained in how many of those loans they can actually issue.”  “Will it lead to more completions among first-time buyers? Likely, yes. But there may also be broader market consequences, including upward pressure on house prices, particularly in already supply-constrained areas.”      The post Virgin and Clydesdale latest lenders to ease stress tests   appeared first on Mortgage Strategy.

Mortgage Strategy’s Top 10 Stories of the Week This week’s standout stories include the FCA’s plans to update thousands of directions affecting over 9,000 firms, and a warning from CTM that nearly half a million homeowners could face a rise in monthly mortgage payments in 2025. Discover these and other key developments below.  FCA to update thousands of directions to over 9,000 firms The Financial Conduct Authority updated around 11,000 requirements, directions or limitations for over 9,000 firms after finding some data was outdated, superseded or contained errors. The regulator clarified these were obligations for firms to act or cease activities, such as restricting new customers or retaining assets. Minor amendments were made automatically, while substantive changes required direct contact. Firms needed no action unless contacted. The updates occurred over several months. Almost half a million homeowners face monthly mortgage rate jump in 2025: CTM Nearly 500,000 homeowners faced steep mortgage payment rises in 2025 as their five-year fixed-rate deals (averaging 2.11%) ended. Switching to lenders’ standard variable rates (7.13%) would cost an extra £510 monthly. Compare the Market found switching to new fixed-rate deals (4.33%-4.60%) could save up to £3,618 annually. Experts urged homeowners to shop around early, warning that delaying risked higher SVR costs amid market uncertainty. FCA encourages lenders to ‘rebalance’ mortgage risk The FCA urged lenders to reassess mortgage risk by considering savings and later-life home equity to improve access for creditworthy borrowers. Speaking at a UK Finance event, Emad Aladhal noted stretched affordability, with many repaying mortgages into retirement. Major banks had already adjusted lending rules after FCA stress test flexibility calls. The regulator promised a June review on risk appetite, innovation, and later-life lending, questioning if housing wealth could be better utilised while ensuring responsible lending. New bricklayers and carpenters lead £3bn apprenticeship plan The government allocated £3bn to fund 120,000 new apprenticeships, prioritising bricklayers, carpenters and healthcare workers to address skills shortages. The plan aimed to support Labour’s pledge to build 1.5 million homes, including £14m for local construction training and £100m for skills bootcamps. Education Secretary Bridget Phillipson urged young people to seize the opportunities. Funding was partly covered by a 32% rise in the Immigration Skills Charge to reduce reliance on foreign labour. Gable Mortgages launches 0% deposit five-year deals Gable Mortgages launched two 0% deposit five-year fixed-rate deals (5.65%-5.95%) for first-time and next-time buyers, targeting renters struggling to save. Loans ranged from £125,000 to £1m, with higher income multiples for key workers. This followed April Mortgages’ recent 100% LTV product. Experts noted such deals help creditworthy renters but warned of risks from negative equity. Increased lender competition may expand low-deposit options, supporting buyers amid high living costs. Former Trussle digital mortgage broker snapped up by OneDome: Report OneDome acquired digital mortgage broker Better.co.uk (formerly Trussle) from US-based Better Home & Finance for an undisclosed sum. Founded in 2015, Trussle had raised £30m before its 2021 discounted sale. OneDome CEO Babek Ismayil said the deal aligned with their all-in-one homebuying platform vision. The purchase follows OneDome’s recent acquisitions, including Coreco Group, expanding its annual mortgage lending to £3.5bn and workforce to 230. Barclays increases rates on purchase and remortgage products Barclays raised rates on selected purchase and remortgage products by 0.10%-0.15%, effective from 30 May. Key increases included its 95% LTV two-year fixed (now 5.05%) and five-year fixed (4.99%), alongside premier products at 60-85% LTV. However, it reduced its 85% LTV tracker rate to 4.98%. The changes followed Barclays’ earlier relaxation of affordability rules, allowing borrowers £30,000 more. Loan limits ranged from £25,000 to £2m depending on product. Housebuilders face forced land sales if they fail to build homes The government introduced measures forcing housebuilders to meet construction deadlines or face land seizures and fines. Developers now had to submit annual progress reports and commit to timelines before receiving planning permission. Those hoarding land risked ‘Delayed Homes Penalties’ or compulsory council purchases. The policy aimed to accelerate delivery of 1.5 million homes, with Deputy PM Angela Rayner criticising years of stalled developments. Large sites with 40% affordable housing were found to build twice as fast. L&C Mortgages achieves B Corp certification L&C Mortgages secured B Corp certification after scoring 87.4 in its first assessment, exceeding the 80-point threshold. The accreditation recognised the broker’s commitment to governance, workers, community, environment and customers. CEO Mark Harrington called it a “proud moment” reflecting their focus on people and planet. The achievement followed L&C’s recent adoption of One Mortgage System’s CRM platform, marking the start of its ongoing sustainability improvements. Unexpected costs hitting FTBs hard: Smoove Two-thirds of recent UK homebuyers faced unexpected costs during purchases, with first-time buyers (66%) hardest hit, Smoove’s research revealed. Renovations, legal fees and stamp duty were the most common surprise expenses, causing frustration for 27% of buyers. While conveyancing costs rose 17% to £1.9bn in 2024, these weren’t the main concern. Smoove called for better upfront education about hidden costs to reduce transaction stress and improve market fluidity. The post Mortgage Strategy’s Top 10 Stories: 26 May to 30 May appeared first on Mortgage Strategy.

This year’s Mortgage Industry Mental Health Charter (MIMHC) Walk and Talk brought together dozens of people from across the mortgage community. Between them they covered 144 miles in six days, raising awareness of mental health issues, while at the same time raising more than £15,000 for the Niall Stringer Foundation, a charity dedicated to preventing suicide among young people. Further donations are welcome until midnight on Friday 30 June. The Walk and Talk event, which took place during Mental Health Awareness Week, was spearheaded by Jason Berry, co-founder of MIMHC and group sales director at Crystal Specialist Finance and Dev Malle, chief business development officer at Simplify. Berry, who was awarded the title of Mortgage Strategy Personality of the Year a few days after the event, commented: “I’m incredibly proud of what we achieved through this year’s Walk and Talk. A huge thank you to my walking partner, Dev Malle, whose support, spirit and humour were constant throughout the 144 miles.” The post MIMHC walk raises £15k – but still time to donate appeared first on Mortgage Strategy.

The proportion of homeowners with over £300,000 left to pay on their mortgages has nearly doubled over the last seven years.   The figure rose to 9% from 5% between 2017 and 2024, according to consultancy Broadstone’s analysis of the Financial Conduct Authority’s latest Financial Lives Survey.  It adds that these levels of “significant” home loan debt are particularly marked in areas where house prices are higher, such as London, where the number jumped to 28% from 17% over the same period.  The survey also shows that one in seven borrowers, or 14%, had outstanding mortgage debt worth at least four times their annual income.  This figure lifted from 11% seven years ago, albeit seeing a slight decline from 16% in 2020 and 2022.  The consultancy points out that the report “uncovers some concerning statistics around homeowners’ financial capabilities”.   It reports that 22% of homeowners who could have changed their mortgage rate in the last three years — remortgaging, porting, or buying — said they did not compare mortgages from two or more lenders.  But despite this, 10% of UK borrowers with a residential mortgage or pay part rent/part mortgage, said that a rise of either £1-49 (3%), or £50-99 (7%), in their monthly repayments would mean they “would struggle to meet their payments”.  Broadstone senior director of risk Paul Matthews says the regulator’s report does not make for “particularly happy reading”.  Matthews points out: “It is clear that many more homeowners are taking on significant levels of mortgage debt, yet household incomes have not kept pace with the continued rises in house prices.   “Given lenders typically cap the maximum amount homeowners can borrow at 4.5 times annual household income it is interesting to see that one in seven said their outstanding mortgage debt was over 4x yearly earnings. He adds: “Moreover, the statistically significant increase in homeowners with over £300,000 in mortgage debt demonstrates the concern over the impact of rising rates in the past few years – especially for homeowners in London who typically hold bigger mortgages.  “This concern is emphasised by some of the behaviours that the Financial Conduct Authority’s data also uncovered with many failing to shop around for the best deal despite small adjustments in monthly repayments making a significant difference over a full mortgage term.”  The post Homeowners with over £300k of remaining debt almost doubles  appeared first on Mortgage Strategy.

MPowered Mortgages has cut its three-year fixed rates.  For new purchase customers, three-year fixed rates for customers paying a 35% deposit have been cut to 3.93% paying a £999 fee. Those with a 20% deposit benefit from a new fixed rate of 4.25% paying a £999 fee. Three-year fixed rates for remortgage customers have also been cut across most LTV bands. The new rates from MPowered will be effective from 2 June. Hinckley & Rugby for Intermediaries has also announced mortgage rate reductions of up to 35 basis points across its entire product range, alongside a series of criteria improvements aimed at helping brokers place more complex cases. Over 30 products have been reduced, this includes Core Residential, two- and five-year fixed rates reduced by up to 0.35%; rates starting from 5.55% up to 90% LTV;  Retention, two- and five-year fixed rates reduced by up to 0.16%; rates starting from 5.07% up to 90% LTV;  Credit Flex, two- and five-year fixed rates reduced by up to 0.35%; rates starting from 5.89% up to 80% LTV. Also, Income Flex, two- and five-year fixed rates reduced by up to 0.31%; rates starting from 5.85% up to 90% LTV; Buy to Let (BTL) Retention, five-year fixed rates reduced by up to 0.10%; rates starting from 5.39% up to 75% LTV ;Visa, two- and five-year fixed rates reduced by up to 0.16%; rates starting from 5.89% up to 90% LTV; and Limited Company, five-year fixed rates reduced by 0.06%; rates starting from 5.79% up to 70% LTV In addition, Hinckley & Rugby has removed the £199 application fee from its core residential products. And retained profit is now accepted on Income Flex, helping limited company directors access finance. The post MPowered and Hinckley & Rugby cut rates appeared first on Mortgage Strategy.