The latest Mortgage Solutions poll shows that 26% of brokers have seen a big change in first-time buyer affordability since stress rate changes have come into play, while 35% have seen a small change in affordability.
Around 19% of brokers said they haven’t seen a change in affordability, and the same number have seen a decline in affordability.
Earlier this year, the Financial Conduct Authority (FCA) said lenders have “flexibility” within the interest rate stress test rule and, since then, lenders have lowered stress rates by 110 basis points on average for lending fixed for five years or fewer.
Rob Clifford, Stonebridge’s CEO, said the mortgage network had seen a more than 50% rise in clients reporting a positive change through brokers and advice.
He added: “It was clear that after a number of years of positive house price growth, the affordability gap was only going one way. The lenders’ shift in approach, permitted by the regulator, is showing effectiveness in really opening the door for more borrowers to get the mortgage they want. Crucially, genuinely within their own monthly affordability.
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“Remember that many tenants still pay far more monthly rent [than] the equivalent mortgage cost, which is further evidence that the slight relaxation in approach by lenders is sensible as opposed to maverick. The challenge continues to be the lack of housing supply and also the amount of deposit required.”
Rachel Geddes, strategic lender relationship director at Mortgage Advice Bureau (MAB), said it was “genuinely encouraging to witness lenders stepping up and making tangible improvements on stress tests”, leading to “welcome boosts in affordability across the board”.
She added: “However, while this is a positive shift, the question remains: are these changes enough to empower the diverse range of prospective buyers navigating today’s market? While enhancing affordability criteria is more of a marathon than a sprint, lenders must continue to explore and pursue every available avenue in terms of innovation.
“This is absolutely crucial to ensure every prospective buyer has the broadest spectrum of opportunities at their disposal, empowering them to confidently take that vital first step towards homeownership.”
First-time buyers seeing boost in affordability post-stress test changes
Carmen Green, director and mortgage and protection adviser at Xpress Mortgages, said the relaxation of stress tests was “improving the affordability for a lot of buyers”, especially first-time buyers.
“Due to the average age of a UK first-time buyer now being 33 years old, many are buying longer-serving properties; for example, skipping the one-bedroom flat purchase for a 2-3-bedroom property that they can grow into as they start family planning.
“To achieve this, it usually means stretching their affordability, taking on the slightly bigger mortgage to buy the larger property and avoid having to move again in the not-so-distant future,” she added.
Green noted that as long as the “stretch” is “done responsibly” with careful budgeting and awareness of future circumstantial or financial changes – such as a rise in interest rates, parental leave and childcare costs – taking a leap further up the property ladder “can make sense and save thousands on moving costs and stamp duty compared to the more traditional route of taking several smaller steps”.
“Many buyers in this age bracket are also further forward in their careers, which could be considered as more sustainable income or better job security, which is a key consideration when taking up a mortgage, especially at the top end of a budget, which is more often the case these days due to property prices rising more quickly than salaries or income,” she added.
Nicholas Mendes, mortgage technical manager and head of marketing at John Charcol, said the firm had seen “some improvement in affordability” since the stress rate changes.
However, he said that “in practice, these shifts have been incremental rather than transformational”.
Mendes added that the fact that over a third of brokers only report a “small change” matches the firm’s own experience, with affordability improving at the margins but not universally.
“Where the adjustment has had the greatest impact is for borrowers whose applications were previously failing by a narrow margin, typically higher loan-to-value (LTV) first-time buyers or single applicants.
“A small reduction in the stressed rate can be enough to tip those cases into affordability, and in real terms, that might translate into a 3-5% uplift in maximum borrowing. That feels meaningful to clients, even if it doesn’t fundamentally change the bigger picture,” he explained.
Mendes warned that the challenge was that “wider affordability pressures remain”, pointing to high house prices, essential spending assumptions, unsecured credit, and childcare costs.
“In that context, the poll reflects reality; progress is welcome, but it is uneven and modest. Further lender flexibility may help, but it will not address the underlying issue of housing supply, which continues to be the real constraint on affordability,” he said.
Stress test changes helping customers with existing commitments
Stephanie Daley, director of partnerships at Alexander Hall, said that from its perspective, clients who have existing commitments or background properties have benefitted most from the reduced stress test guidelines.
She explained: “With some lenders in the past, credit commitments and childcare costs [have brought] down affordability significantly. We are now seeing that easing slightly and more flexibility on max lending for those borrowers. This has particularly helped remortgage clients who perhaps purchased as first-time buyers and now have additional commitments such as nursery fees and car finance.
“For those clients who already have a strong income and little financial commitments, their max lending has not been impacted quite as significantly, although they have benefitted from improved LTI multiples.”
Daley added that over the last few months, falling interest rates, rising real wages, and evolving regulatory support had boosted affordability, but also helped in growing consumer appetite, which has led to more lender flexibility.
“While affordability remains a challenge, particularly in London, the consensus is positive. We’re seeing more opportunities to tailor solutions that genuinely fit our clients’ needs. In my opinion, the market is moving in the right direction – towards more inclusive and sustainable homeownership,” she noted.
