The lender said the stress rate change could allow 20,000 more customers to get a mortgage with HSBC UK and that it would allow them to borrow larger amounts.
The changes come into effect immediately, with mortgages received from today subject to new calculations.
HSBC said the change would benefit purchase and remortgage applications.
The firm said stress rates were an integral part of ensuring mortgage affordability and lowering them would “broaden access to homeownership, helping individuals and families, including first-time buyers with home buying aspirations”.
HSBC said the average offer increase for first-time buyers, where they do increase, would be around £39,000.
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Oli O’Donoghue, HSBC UK’s head of mortgages, said “We understand the challenges faced by people looking to secure a mortgage. This adjustment to our stress rates, which will directly improve affordability for many aspiring homeowners, reflects our commitment to making homeownership more accessible.
“By carefully reviewing our affordability calculations, allowing more customers to meet affordability criteria and potentially access increased borrowing amounts, we are aiming to ease some of the pressure on prospective buyers so more people can realise their dream of owning their own home.”
HSBC is the latest lender to tweak its stress rates, with Lloyds Banking Group and Santander both making changes to their stress rates in the last few weeks.
The Financial Conduct Authority (FCA) is also consulting on stress tests and said it would launch a call for evidence on current and alternative approaches.
The FCA said that with interest rates falling, the approach to stress testing may be “unduly restricting access to otherwise affordable mortgages”.
