Analysis from Coventry Building Society found that in March, a single buyer with an average UK salary of £37,430 with a £345 car payment and no other credit commitments would be able to borrow a maximum of £149,239.
This would have been £18,000 lower than a similar buyer without a car loan.
Joint borrowers who were both on the average salary would have seen their maximum borrowing cut by more than £13,000 if they both had a £345 car loan, accessing a mortgage of £316,187.
Recently, the Financial Conduct Authority (FCA) updated its rules to allow borrowers to reduce their mortgage term or remortgage to a cheaper deal without a full affordability check.
According to Coventry Building Society, a single borrower with a car loan can now access a mortgage of up to £162,198, while joint borrowers can get a loan of up to £321,745.
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Jonathan Stinton, head of intermediary relationships at Coventry Building Society, said: “Just a few months ago, a typical car payment could reduce borrowing power by over £18,000 – that could mean people had to compromise on space, location, or put the brakes on their move altogether. Now, thanks to regulatory changes, that impact has dropped to around £5,000. It’s a big shift, and it gives borrowers more flexibility to balance lifestyle choices like car ownership with their home buying goals.
“That said, a car payment still affects how much clients can borrow – it’s just not the deal-breaker it used to be. Brokers can help clients navigate these changes to make more informed decisions, especially when remortgaging or adjusting terms.”
