Government ministers are set to meet with leading mortgage lenders today to discuss new measures aimed at helping more people buy their first home. Among the proposals on the table is the possibility of giving borrowers access to larger mortgages, with the hope of easing entry onto the housing ladder.
The talks will be led by Lucy Rigby, the newly appointed economic secretary to the Treasury, alongside housing minister Matthew Pennycook. Both are expected to emphasise that first-time buyers remain at the heart of the Government’s housing priorities, with reforms to lending and a commitment to build 1.5 million new homes forming key parts of their strategy.
Rigby highlighted the Government’s stance ahead of the meeting, stating that helping people take their first step into homeownership is central to Labour’s plan for change. She added that bringing banks and building societies together is part of a drive to make mortgages easier to access and to explore fresh lending options.
These discussions follow Chancellor Rachel Reeves’ announcement in July, where she unveiled reforms to financial regulations designed to widen access to mortgage lending. One of the biggest changes involves relaxing restrictions so lenders can offer loans worth five to six times a buyer’s annual salary. At present, most mortgages are capped at around 4.5 times income.
The Financial Conduct Authority (FCA) is also simplifying the rules surrounding mortgage lending, including adjustments to affordability checks that could open the door for more people to qualify for a home loan.
However, not everyone is convinced. Critics argue that while larger loans may sound attractive, they could in fact make homes even less affordable by pushing prices higher. There are also warnings that borrowers could overstretch themselves at a time when many households are already struggling with the cost of living and repossessions are on the rise.
This is not the first time ministers have engaged with lenders in recent weeks. Just last week, another round of talks took place with building societies. During that meeting, discussions focused on how low- and no-deposit mortgages might help prospective buyers who are currently locked out of the market.
The Building Societies Association suggested that many potential buyers do not realise they could qualify for a mortgage under these products, and that better awareness could help open the market up to more households.
Several major lenders have already started adapting their products in response to both demand and regulatory change. Nationwide Building Society recently revealed plans to back an additional 10,000 first-time buyers by lowering the income thresholds for its ‘Helping Hand’ mortgage.
Similarly, Lloyds Banking Group has pledged an extra £4 billion for lending, specifically targeted at first-time buyers looking to borrow between 4.5 and 5.5 times their income. According to Lloyds, this could assist around 16,000 buyers, based on the example of a £250,000 mortgage.
Industry experts remain cautious about the wider impact. Nicholas Mendes, mortgage technical manager at broker John Charcol, believes that the changes may provide a short-term boost for some households, especially with the mix of higher income multiples and lower-deposit products.
He stressed, however, that the effect may be limited when compared with the size of the overall housing market. Rising prices and elevated interest rates remain the bigger hurdles, he said, and could outweigh the benefits of regulatory reform.
Looking further ahead, Mendes warned that the success of these initiatives will depend heavily on whether the Government delivers on its pledge to build 1.5 million new homes. Without an increase in supply, he cautioned, more generous lending terms could simply drive prices even higher.
The upcoming talks with lenders are therefore seen as part of a broader balancing act: making mortgages more accessible while ensuring that the market does not overheat. For now, first-time buyers will be watching closely to see whether these changes can make a real difference to their chances of getting on the property ladder.
Download NOW
4 Simple Steps To Becoming Wealthy Through Property