So this month, Mortgage Solutions is asking: Are lenders being bold enough in their criteria changes?
Noord Romjon, director of New Homes Mortgage Broker
The main difficulties customers face are affordability and deposit, so we welcome LTI enhancements to the market, which really help with affordability. In the past, these have only been available for customers on high salaries, so it is great to see schemes like Helping Hand from Nationwide, which has recently reduced the minimum income to £35,000. It would be great if they increased the maximum LTV for new-build flats, as there are not many first-time buyers who have a 25% deposit, which is still a gap in the market.
Our core business is the new-build market, so I would love to see improvements on new-build flats. Lender choice at 95% and even 90% LTV is currently limited, and this constrains options for many perfectly viable borrowers.
Welcome to the future: how collaboration is driving the shift to digital home buying
Sponsored by Halifax Intermediaries
Another under-served group is foreign nationals, and I want to see more lenders help these customers.
At present, there are only a small number of lenders supporting this market at higher LTVs, and I am always asking lenders when they are going to improve their criteria on this. We regularly encounter well-qualified customers who fall outside current criteria, and this is an area where lenders could and should be doing more.
Lastly, I feel more support is needed for self-employed applicants. Enhanced LTIs are typically reserved for employed borrowers, and we need more lenders that consider retained profits rather than just salary and dividends.
Tom Davies, group financial services managing director at Leaders Romans Group and Mortgage Scout
Lenders are making positive changes – whether they’re bold enough depends on how you define it. Within the limits of regulation, risk, funding and service capacity, many are doing what they can.
Reducing affordability stress rates, which is an evolving piece, looks very positive – increasing borrowing power, particularly for first-time buyers. We’ve also seen more lenders increase LTV offerings to 95% on new-build houses and flats, critical for those struggling to raise a deposit.
There’s been a welcome shift in flexibility around term lengths and maximum age. For borrowers coming off very low fixed rates and juggling higher living costs, the ability to extend their term, ease monthly payments and still overpay when possible has been crucial.
The criteria for foreign nationals is also improving. Lenders such as Skipton, Barclays, Principality and Nottingham have been strong here, and now HSBC and Nationwide are offering up to 85% LTV for clients without indefinite leave to remain – an important step in the diverse London market.
The most innovative criteria shifts tend to come from challenger lenders, who need to differentiate on flexibility rather than price. But there’s room for more progress. Self-employed clients – especially those with only one year’s accounts – still face limited options and less competitive rates.
And the biggest opportunity? Regulatory reform. The current cap on higher-LTI lending is a legacy rule that no longer reflects market reality. Giving lenders more room to manoeuvre here could unlock meaningful change. With bold promises from the government to address the UK’s housing shortage, we should also expect a renewed focus from lenders to collaborate on new schemes that are widely accessible.
So yes, lenders are evolving – but there’s still a way to go.
George Yerou, head of mortgage lending at Mortgage Quest and Freelancer Financials
Although lenders could always be doing more to help people get on the property ladder, I do feel they’re carrying a lot on their shoulders right now.
With the loss of Help to Buy and no meaningful housing incentives in Rachel Reeves’ latest Spring Statement, the pressure has fallen on lenders to come up with inventive solutions.
We’ve seen some positive moves, like Accord’s £5,000 deposit mortgage and Skipton’s 100% product, but both come with stricter affordability and credit criteria. These are great on paper, but they won’t be accessible to everyone.
One of the most welcome recent changes was Nationwide lowering the minimum income threshold on its Helping Hand product just last week. A large portion of our first-time buyer clients earn around £35,000, so being able to offer up to six times income at that level is incredibly helpful. More lenders should be following suit.
That said, the area where we’ve seen the most stagnation is the buy-to-let (BTL) market. Since the Truss era, lender stress tests have almost crippled the personal BTL space. That said, it was encouraging to see BM Solutions recently lower its stress test rates – a small but positive step. We need more lenders to follow suit. Landlords still have a key role to play in the housing ecosystem, especially for those not yet ready or able to buy.
Lenders are taking steps in the right direction, but there’s still a long way to go.
