Borrowing Power Boosted as Lenders Cut Rates and Ease Affordability Rules

A noticeable shift is taking place in the UK mortgage market, creating fresh opportunities for buyers, homeowners, and property investors alike. Major lenders are responding to expectations of lower interest rates by reducing fixed-rate pricing and softening affordability checks.

These moves are beginning to improve borrowing potential and widen access to competitive mortgage products—especially for those who may have previously struggled to get approved.

At Mortgage321, we’re closely tracking these changes and helping clients take advantage of the evolving landscape.

Lenders Cut Fixed Rates Across the Board

Over the past few weeks, some of the UK’s biggest lenders—including Barclays, HSBC, TSB, Coventry Building Society and The Co-operative Bank—have announced notable reductions to their fixed-rate mortgages.

Barclays has taken a lead among FTSE 100 lenders, launching two- and five-year fixed deals starting from just 3.99%. HSBC has followed suit, reducing rates across both residential and buy-to-let ranges, with some five-year fixed options now falling below the 4% mark.

This growing competition among lenders is reflected in national averages, with two-year fixed rates now at 4.81% and five-year fixes down to 4.70%, according to Rightmove. These figures represent a steady decline over the past 12 months—and could fall further if base rate cuts materialise in 2025.

Affordability Criteria Eased—Borrow More Than Before

Rate cuts aren’t the only change. Some lenders are also revisiting their affordability models, making it easier for borrowers to qualify for higher mortgage amounts.

Lloyds Banking Group—home to Halifax, Bank of Scotland, and BM Solutions—has relaxed key affordability tests. For the average applicant, this could mean borrowing up to £38,000 more—a 13% increase in maximum loan size for some.

Santander has gone further, lowering its stress-testing rate by up to 0.75 percentage points—its most borrower-friendly criteria since 2022. These revisions could make a significant difference for first-time buyers and home movers who were previously held back by strict income and expenditure thresholds.

At Mortgage321, we work with lenders who are embracing these changes—and we know how to match your circumstances to the right product.

Remortgage Activity on the Rise

With more attractive deals returning to the market, many homeowners are acting quickly to secure better terms. The Bank of England’s latest Credit Conditions Survey shows a marked increase in remortgaging activity, particularly among those whose existing fixed deals are nearing expiry.

Expectations that the base rate—currently at 4.5%—will be cut later this year are fuelling this activity. If market forecasts prove accurate, we could see multiple base rate reductions through 2025, opening the door to even lower mortgage rates and greater flexibility for borrowers.

A More Accessible Lending Environment

The Financial Conduct Authority (FCA) has also hinted at revisiting aspects of its mortgage affordability framework. After years of cautious regulation, the FCA is considering whether lending rules can be responsibly relaxed to support access to homeownership—without compromising financial stability.

This creates a more supportive environment for specialist borrowers, including:

• Self-employed individuals with variable income
  
• Clients with historic credit issues
  
• Portfolio landlords and limited company investors
  
• Those looking to raise capital for home improvements or business investment
  

At Mortgage321, we specialise in these complex cases—and we’re well-positioned to help you navigate today’s evolving criteria.

What Does This Mean for You?

Whether you're planning your first step onto the property ladder, looking to move, or reviewing your current mortgage deal, now could be an excellent time to act.

• Rates are falling – Lock in a lower fixed rate before potential changes.
  
• Affordability rules are easing – You might be able to borrow more than before.
  
• Remortgage deals are improving – Don’t wait until your current deal ends.
  

With over 30 years of experience in complex mortgage lending, Mortgage321 is here to provide honest, tailored advice in a fast-changing market. We’ll help you understand what these developments mean for your specific situation—and secure a solution that works for you.

📞 Ready to explore your options?

Contact Mortgage321 today to schedule a free, no-obligation consultation.

All information is accurate as of 1st May 2025. This article is for general guidance only and does not constitute personal financial advice.