Latest in a series of affordability adjustments by major lenders
Virgin Money and Clydesdale Bank have eased their mortgage stress testing requirements, allowing residential borrowers to qualify for larger loans on variable and short-term fixed rate products.
The lenders have lowered the stress rate used in affordability assessments for products with a fixed term of less than five years. The change means some borrowers may now qualify for significantly higher mortgage amounts, depending on their financial circumstances.
For example, joint applicants with a combined income of £85,000 could see their borrowing potential increase by up to £40,000. Clydesdale’s proposition is particularly geared toward higher-income borrowers, who may benefit from even greater uplifts in lending capacity.
The policy change follows a similar move earlier this month by Nationwide Building Society, which owns Virgin Money. Nationwide’s adjustment allowed for an estimated £28,000 increase in loan availability under its revised stress testing approach.
Several other high street banks — including Barclays, HSBC, Halifax, Lloyds Bank and Santander — have also made recent changes to their affordability calculations. The Financial Conduct Authority has earlier called on lenders to tailor their affordability assessments to better meet customer needs in a market where interest rates are gradually falling.
Elsewhere, Darlington Building Society has introduced a refreshed suite of two-year fixed buy-to-let mortgages, including a new remortgage product for landlords. The deals, available immediately, cater to a broad spectrum of clients including first-time landlords, expats, and holiday let investors. Rates start from 4.54%, with a notable flat fee option designed for larger loan sizes.
Meanwhile, Hinckley & Rugby for Intermediaries has announced rate reductions of up to 35 basis points across more than 30 mortgage products. The lender has also made several criteria improvements aimed at complex cases, including options for clients with non-standard income or historic credit issues. The core residential product range now starts from 5.55%, with application fees removed for some loans.
Fintech lender MPowered Mortgages has also reduced its three-year fixed rates. The new rates, starting from 3.93% for purchasers with a 35% deposit, take effect on Monday, June 2. The lender has also applied cuts across most LTV bands for remortgage customers.
Want to be regularly updated with mortgage news and features? Get exclusive interviews, breaking news, and industry events in your inbox – subscribe to our FREE daily newsletter. You can also follow us on Facebook, X (formerly Twitter), and LinkedIn.
