Mortgage Affordability Changes in 2025 – What You Need to Know

In March 2025, the Bank of England announced a major change to the way lenders assess mortgage affordability. This has created new opportunities for borrowers who, under the old rules, may not have been able to borrow enough to purchase the property they wanted.

While this sounds like good news, it’s important to understand both the advantages and the risks before deciding whether borrowing more is the right step for you.

What Has Changed?

Until recently, lenders were required to apply a strict “stress test” to certain mortgages—particularly those with fixed terms of less than five years. This often restricted how much people could borrow.

That requirement has now been removed, meaning lenders have more discretion when assessing affordability. In practice, this means higher income multiples are becoming available.

However, lenders still have to follow the Financial Conduct Authority (FCA) rules on responsible lending, so affordability checks remain in place.

How Much Can I Borrow Now?

Historically, most borrowers could expect to borrow around 4.5 times their income. In certain circumstances—such as for professionals or higher earners—this could stretch to 5 or even 5.5 times income.

Now, many lenders are moving towards offering 5 to 5.5 times income as standard, and in some cases:

• 6 times income – available with selected lenders, particularly for first-time buyers.
  
• 7 times income – very limited options, usually tied to long-term fixed products (10 years or more) and subject to strict criteria.

Even borrowers with a limited trading history, such as company directors with only one year’s accounts, may find more flexible options opening up.

What About Credit Issues?

Some lenders are prepared to offer up to 6 times income with as little as a 5% deposit, even for borrowers who have had historic credit problems, such as missed payments.

This will depend heavily on individual circumstances, but it shows how much more flexible the market has become.

It’s a good idea to check your credit history before making enquiries.

Should You Maximise Affordability?

While it can be tempting to borrow as much as possible, affordability shouldn’t be stretched to the limit. Just because a lender is willing to lend more, it doesn’t mean you should take it.

The most important factor is whether you can comfortably afford the repayments now and in the future. Consider:

• How stable is your income?
  
• Do you have other financial commitments?
  
• Could you still manage repayments if interest rates rise or your circumstances change?

Extending the mortgage term (now available up to 40 years with some lenders) can reduce monthly payments, but this often means paying more interest over time.

What Are the Concerns?

Some commentators worry that allowing borrowers to take on larger loans could put upward pressure on house prices, making affordability even more challenging in the long run.

Others raise concerns about whether lending 6–7 times income is sustainable. However, unlike before the financial crisis in 2007, today’s mortgage market operates under much stricter regulation. Lenders are still required to lend responsibly and assess each application carefully.

Final Thoughts

The affordability rule changes could make a big difference to many buyers, especially first-time buyers who have been struggling to get on the ladder.

However, every case is different. The right decision isn’t just about what you can borrow—it’s about what you can realistically and sustainably afford.

If you’d like to understand how these changes might affect your own borrowing capacity, it’s worth speaking to a specialist adviser who can help you explore the full range of options.

Important Information

Your home may be repossessed if you do not keep up repayments on your mortgage.

There may be a fee for mortgage advice. The precise amount will depend upon your circumstances.

Symmonds de Lacey is a trading style of Easy Street Financial Services Ltd, which is authorised and regulated by the Financial Conduct Authority. Registered in England and Wales. Company number 6430453. Registered address: Basepoint, 377-399 London Road, Camberley, Surrey, GU15 3HL.

Please note, we are not tax advisers. For tax advice, please speak to your accountant or a qualified tax adviser.

Information correct at time of writing – September 2025