UK lenders are intensifying a mortgage price battle, with HSBC and the Co-operative Bank announcing fresh cuts to their mortgage rates. At the same time, Halifax and Lloyds Bank are easing their affordability checks, making it possible for more buyers to borrow larger sums than before.
There has also been a notable rise in the number of low-deposit mortgage deals available, with options allowing buyers to borrow up to 95% of a property’s value reaching levels not seen since 2007. This indicates a renewed focus on helping first-time buyers and those with smaller deposits onto the property ladder.
Recently, many lenders have started reducing their mortgage rates. This appears to be a reaction to the financial uncertainty caused by global market pressures, including the impact of new US trade tariffs, which have influenced forecasts for interest rates in the UK.
Barclays was the first of the major high street banks to respond, slashing the cost of some fixed-rate deals to under 4%. This move followed similar reductions by smaller lenders, signalling a wider shift in the mortgage market.
Following this, other big lenders have followed suit. HSBC announced on Tuesday that it would introduce new rate cuts across a range of mortgage products starting Wednesday, 16 April. The full breakdown of the new pricing is expected to be revealed shortly.
The Co-operative Bank has also joined the rate-cutting trend. It confirmed plans to relaunch both its standard and buy-to-let mortgage products from Thursday, 17 April. As part of this relaunch, the bank is reducing rates on two- and three-year fixed deals for homebuyers by up to 0.26 percentage points. For those looking to remortgage, similar products will see reductions of up to 0.18 percentage points.
The move by major lenders comes as positive news for those currently house hunting or looking to remortgage. It increases the level of choice in the market and could result in lower monthly repayments for many borrowers.
Other lenders, including Gen H, have also entered the fray, announcing their own rate reductions. This competitive environment could benefit a wide range of customers, particularly at a time when affordability and access to credit remain key concerns for many households.
As competition continues to grow, borrowers are being urged to shop around and compare deals, as more favourable terms may become available in the coming weeks.
Several of the UK’s leading mortgage lenders have announced changes to their affordability criteria, making it easier for many potential homebuyers to secure the funding they need. Following in the footsteps of Santander, which relaxed its rules last month, other major banks including Halifax, Bank of Scotland, Lloyds Bank, and BM Solutions—all part of the Lloyds Banking Group—have now implemented similar adjustments. According to a spokesperson, these changes could increase the borrowing potential for a typical household by around £38,000, helping more buyers take that crucial step onto or up the property ladder.
Traditionally, mortgage lenders apply a stress test when assessing whether an applicant can afford a mortgage. This involves calculating whether the borrower would still be able to make repayments if interest rates were to rise significantly. However, the Financial Conduct Authority (FCA) has recently raised concerns that the way some lenders are carrying out these tests might be too restrictive, ultimately preventing otherwise eligible borrowers from securing a home loan.
In light of this feedback, Lloyds Banking Group has moved quickly to revise its approach. The changes, which come into effect immediately, involve lowering the interest rates used in stress testing. The group explained that this doesn’t mean skipping affordability checks altogether—those will still be in place—but it does mean borrowers who meet the requirements may now be eligible for larger loan amounts than before.
To give a practical example, Lloyds illustrated how these new criteria could impact a typical family. A couple with two dependent children and a combined annual income of £75,000 might previously have been approved for a maximum mortgage of £286,000. Under the updated rules, however, they could now borrow up to £324,000, depending on the product they choose. That increase could make all the difference in securing a suitable property, particularly in today’s competitive housing market.
The changes come at a time when many potential buyers are feeling squeezed by high house prices and the rising cost of living. One of the major challenges facing first-time buyers, in particular, is saving for a sufficient deposit. However, there is good news on that front as well. According to financial data provider Moneyfacts, the number of mortgage deals available to borrowers with just a 5% or 10% deposit has reached its highest level since March 2008. This is especially promising for buyers struggling to accumulate a large lump sum.
More broadly, this move by some of the UK’s biggest banks suggests a growing awareness of the need to support buyers in a difficult market. With inflation still affecting everyday budgets and interest rates under constant scrutiny, these affordability changes may help restore some balance for households keen to make a move.
Increased mortgage flexibility could also benefit existing homeowners looking to remortgage. As more competitive deals appear on the market, there may be greater opportunities to secure better rates or release additional equity, especially if affordability rules become less of a barrier.
While there’s no one-size-fits-all approach in the mortgage sector, these changes do indicate a more borrower-friendly environment. Lenders seem to be recognising that rigid affordability models may no longer reflect the realities of modern living. By relaxing stress testing requirements, they could help more people take advantage of the opportunities in today’s housing market.
It remains to be seen how other lenders will respond, but if this trend continues, we may be entering a period of renewed optimism for both buyers and those looking to remortgage. As always, potential borrowers are advised to seek financial advice and compare products carefully to ensure they choose the most suitable mortgage for their needs.
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