Two major lenders relax mortgage rules - first-time buyers can now borrow £39,000 more

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Two more lenders have relaxed their mortgage rules, meaning homebuyers can now potentially borrow tens of thousands of pounds more.

Both HSBC and First Direct have announced a change to the stress rates used in their mortgage affordability calculations. The changes will benefit those either buying or remortgaging.

HSBC says the changes could enable 20,000 more customers to get a home loan with the bank alongside being able to borrow larger amounts as part of a mortgage.

It explained that where offers increase for first time buyers, the average increase in loan will be as much as £39,000.

'We understand the challenges faced by people looking to secure a mortgage,' said Oli O’Donoghue, head of mortgages at HSBC.

'By carefully reviewing our affordability calculations, allowing more customers to meet affordability criteria and potentially access increased borrowing amounts, we are aiming to ease some of the pressure on prospective buyers so more people can realise their dream of owning their own home.'

Borrow more: HSBC mortgages are now subject to the new stress rate calculations. The changes will benefit both purchase and remortgage applications

Meanwhile, First Direct - which is part of HSBC - says the move could benefit around 85 per cent of mortgage applicants, allowing them to borrow an average of £22,000 more. 

It follows hot on the heels of Lloyds Banking Group, which last week made changes that could enable its customers to borrow up to 13 per cent more on a mortgage.

And last month, Santander relaxed its mortgage affordability rules to enable customers to borrow up to £35,000 more.  

Liam O’Hara, head of mortgages at First Direct said: 'We want to support our customers on their home ownership journey and the reduction to our stress rates reflects that we are committed to make owning a home more accessible. 

'The changes will benefit the vast majority of our existing customer base when they decide to remortgage or take out a new product.

The changes to affordability by First Direct and HSBC comes at a time when mortgage rates have been falling.

This week, Nationwide Building Society cut rates following on from the likes of NatWest, Halifax and Santander.

There are now eight mortgage lenders offering fixed rate deals below 4 per cent to borrowers.

While these are for those buying with the biggest deposits, rates have also been improving for those buying with less cash in the bank.

It is possible to get a two-year fix at 4.43 per cent with a 10 per cent deposit while those buying with a 15 per cent deposit can get as low as 4.17 per cent.

Justin Moy, managing director at EHF Mortgages told the news agency Newspage: 'Improvements to affordability and new product options are a tremendous way of showing that mortgage lenders are very much open for business and keen to find new ways of helping borrowers. 

'HSBC is just the latest to potentially lend more, stretching incomes that little bit more to help fund those dream purchases. 

'These and similar improvements give the market a welcome boost and will help carry borrowers through a tricky few months at least.'