Some couples applying for a Santander mortgage will see the maximum they can borrow increase by £130,000 overnight after the bank loosened its lending rules.
Santander is the latest in a line of lenders to allow some borrowers to access bigger mortgages after intervention by the City regulator and new guidelines from the Bank of England designed to help more people on to the housing ladder.
However, brokers said Santander was unusual in that it would now be allowing some higher earners with smaller deposits to borrow an extra 24% at a stroke.
The bank gave the example of a couple with an £80,000 deposit or the same amount of equity in their property, where one earns £75,000 a year and the other £50,000. On Monday they could borrow a maximum of £556,500, assuming a standard mortgage and a 25-year term, but on Tuesday this will rise to £687,500. That is 24% more than before.
Santander gave other examples where the extra amounts people would be able to borrow were smaller – 12% in one case, and 4% in another.
In the last few months, many banks and building societies have announced changes to their rules. Some have loosened their “stress test” rules, which check that repayments will remain affordable even if mortgage rates go up, while others have increased their loan-to-income lending caps above the traditional 4.5:1 ratio.
In March, the Financial Conduct Authority said the tests that some lenders were doing “may be unduly restricting access to otherwise affordable mortgages”. In July, the Bank of England issued guidelines that meant lenders could offer more high loan-to-income mortgages.
Santander’s changes are a result of it updating its loan-to-income rules. The extra that people will be able to borrow will depend on how much they earn and the size of their deposit, or how much equity they have.
The new rules mean applicants earning a total of £100,000 or more can now access 5.5 times their income on all loan-to-value (LTV) levels up to 90%. In other words, they will need a minimum deposit or equity of 10% of the home’s value to be eligible for those terms.
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Aaron Strutt, of the broker Trinity Financial, said: “Lots of the banks and building societies have made changes to their lending rules recently, but not many of them are offering to provide up to 24% more to borrowers with smaller deposits, even if they are higher earners.”
David Morris, the head of homes at Santander UK, said 2025 was “quickly becoming the ‘year of the buyer’”. The changes would “hopefully help more would-be buyers access the money they need to buy the home of their dreams,” he said.