The dream of homeownership remains out of reach for many, as house prices continue to rise faster than wages in several regions, making mortgage affordability a significant challenge for first-time buyers.
However, our recent analysis of Land Registry data brings welcome news for aspiring homeowners and the mortgage brokers who support them, highlighting the impact of changes in lending assessments on the UK housing market.
According to our analysis, 51,602 additional properties would have been within reach of first-time buyers, thanks to adjustments to the rules on higher loan-to-income lending, representing a 65% increase in affordable homes.
This significant rise is a result of our revised affordability assessments for first-time buyer mortgages, allowing single or joint applicants earning £30,000 to borrow up to 95% loan-to-value, enabling them to purchase homes worth up to £173,000 with a £165,000 mortgage.
For instance, our first-time buyer mortgage options have been designed to support borrowers in achieving their homeownership goals, with competitive interest rates and flexible repayment terms.
This development should provide a much-needed boost to the housing market, making it more accessible to first-time buyers and supporting the UK’s growth agenda.
Prior to these changes, first-time buyers with a 5% deposit could only access homes worth up to £141,000 when borrowing from Leeds Building Society, limiting their options in the housing market.
Using Land Registry data from 1 July 2024 to 31 June 2025, we calculated that the number of affordable homes for eligible first-time buyers would have risen to 143,017, up from 86,915, a significant 65% increase, if the new lending rules had been in place.
This should reassure our intermediary partners that a £30,000 income can be sufficient to help their clients achieve their homeownership dreams, encouraging brokers to revisit previous applications and contact prospective buyers who may have thought they weren’t ready to take their first step onto the property ladder.
Updated guidance on mortgage affordability
The recent changes made by lenders should provide the housing market with the boost it needs, following clarification from the Financial Conduct Authority (FCA) on stress-testing rules, which has led to a number of lenders altering their affordability assessments.
Previous limits were restricting lenders’ ability to support aspiring homeowners and the UK growth agenda, but the refreshed guidance from the FCA has clarified how to incorporate future interest rate movements into stress testing, allowing for more flexible and realistic affordability assessments.
We hope that lenders will continue to develop innovative solutions to support more first-time buyers in achieving their homeownership goals.
The FCA’s guidance emphasizes that banks and building societies have flexibility in choosing a stress rate, linking to reversion rates or future product rates rather than applying a fixed margin above current standard variable rates, enabling lenders to make more informed decisions when assessing mortgage applications.
Following this clarification, we have taken action, and the changes are already benefiting borrowers buying their first home, moving up the property ladder, or remortgaging their existing property, with applicants able to borrow thousands of pounds more than previously, thanks to more generous mortgage affordability assessments.
Stress-testing requirements have unduly held back some borrowers, so it’s positive to see lenders able to lend more to customers as a result of these changes in affordability assessments, supporting the growth of the UK housing market.
Saying yes to more mortgage applications
Avoiding unnecessarily restrictive affordability tests, particularly in a falling interest rate environment, is also great news for mortgage brokers, enabling them to say yes to more clients and revisit affordability on cases where applications previously fell short, increasing the number of successful mortgage applications.
All lenders are mindful of balancing more generous affordability with responsible lending practices, and we will continue to update our stress-rate assumptions and affordability models to align with market conditions and regulatory expectations, collaborating with our intermediary partners to achieve the best outcomes for borrowers.
The adjustments to affordability models offer a more realistic view of what borrowers can afford to repay each month, supporting the growth of the UK housing market.
Our goal is to make homeownership more accessible to more people, and over recent years, a combination of high house prices, the increasing cost of living, limited housing stock, and higher interest rates has made it difficult for borrowers to achieve their homeownership dreams.
To help aspirational homeowners overcome these obstacles, lenders are launching more innovative mortgage products, such as competitive first-time buyer mortgages, which are having a huge impact on their clients, providing them with more affordable options and a better chance of getting a foot on the property ladder.
Hopefully, this will provide some reassurance to our intermediary partners and support the growth of the UK housing market.
The purposeful action taken now will pave the way for future homeowners, and we hope that lenders will continue to develop solutions to support more first-time buyers, further bolstering the future of the housing market and supporting the UK’s economic growth.
Martese Carton is director of mortgage distribution at Leeds Building Society
This article featured in the December 2025/January 2026 edition of Mortgage Strategy.
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