Fresh hope for first-time homebuyers

“CAREFULLY measured” easing of mortgage lending rules could help more first-time buyers into the market without leading to a significant increase in arrears, according to a banking and finance industry body.

- VICKY SHAW

UK Finance said its analysis suggests that a modest increase in lending, enabled by lower stress rates, could improve access to mortgages - particularly for first-time buyers - without significantly raising arrears.

Lenders carry out stress tests to take account of the impact of likely future interest rates rises on a customer’s mortgage payments, when determining whether a mortgage is affordable.

UK Finance said, despite some sharp rises in interest rates since 2022, most borrowers coming off fixed-rate mortgages faced rates below the levels they were originally stress-tested against. More recently, the Bank of England base rate has been on a downward path.