Santander becomes first major lender to loosen mortgage rules
Santander has become the first major UK lender to relax its mortgage rules following a nudge from the Financial Conduct Authority (FCA).
Homebuyers could be able to borrow an extra £35,000 on a mortgage under the changed rules.
The UK’s fourth-largest mortgage lender will reduce rates on borrower’s stress tests, which are used to check loans can be paid if interest rates were to rise.
Currently, borrowers are assessed to ensure they can afford a rate around one point higher than the bank’s standard variable rate (SVR) of 6.75 per cent, which applies to homeowners once their fixed-rate deal expires.
Santander will lower its stress rate to between six and seven per cent.
The bank said this meant borrowers would be able to take out loans of between £10,000 and £35,000 more, depending on their salary.
This followed the FCA’s chief executive Nikhil Rathi telling the Treasury Committee on Tuesday that lenders were overly careful on stress tests.
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