It’s been a challenging few years for first-time buyers in the UK. But in 2025, a long-awaited shift has arrived and it could finally open the door to homeownership for thousands.
So What’s Changed?
In March 2025, the Bank of England made a significant change to its lending guidance, leading to the relaxation of mortgage stress testing requirements.
Previously, lenders had to check whether you could afford your mortgage if interest rates rose sharply, typically by assessing your ability to repay at the lender’s standard variable rate (SVR) plus 1%. This rule, although well-meaning, blocked many would-be buyers who were managing higher rent payments without difficulty.
Now, if you’re taking out a fixed-rate mortgage of less than five years, this additional stress test is no longer required. As a result, major and specialist lenders have already updated their criteria.
Example: A household earning £49,500 could now borrow £210,000 instead of £196,000, a 7% increase in borrowing power.
What This Means for First-Time Buyers
For many, this change could be a game-changer.
Greater borrowing capacity: You may now afford a better property or one in a more desirable area.
Faster route to ownership: Buyers may get onto the property ladder months or even years sooner than planned.
More inclusive lending: Those previously held back by affordability tests, despite having strong financial habits, now have more opportunity.
This is a real opportunity for first-time buyers to move forward with greater confidence and clarity.
What’s the Catch? A Sensible Approach to a Positive Change
The outlook is promising, but it’s important to approach this new flexibility with care.
Think of it not as a blank cheque, but as a larger toolkit, and one that still requires a sound plan.
Be Realistic About Repayments
Borrowing more means higher monthly commitments. Make sure your repayments remain affordable, both now and in the years ahead.
Tip: Ask yourself, “Would I still be comfortable if interest rates rose after my fixed term ends?”
Remember: Fixed Rates Don’t Last Forever
The relaxed rules apply to fixed-rate mortgages under five years. Once that term ends, you’ll likely need to remortgage, and rates may be higher.
Tip: Build a buffer into your budget. Planning now gives you peace of mind later.
Increased Competition May Push Up Prices
Savills predicts house prices could rise 5%–7.5% over the next five years as more buyers enter the market. That’s good news for long-term homeowners, but it means acting sooner may be financially wise.
Tip: Don’t delay if you’re ready. The earlier you buy, the better your position if prices rise.
How to Make the Most of the New Rules
Now more than ever, preparation is key. Here’s how to get ahead:
- Check your credit with all three UK agencies (Experian, Equifax, TransUnion)
- Organise your documents: proof of income, ID, deposit, recent bank statements
- Understand your affordability, not just the maximum you can borrow
- Consider a shorter fixed-rate deal to benefit from the new rules
Why Work with an Independent Mortgage Adviser
While the rules have changed, not all lenders interpret them the same way. Some are more cautious than others, and the criteria can vary widely.
As an independent mortgage adviser, I can:
- Help you understand exactly how much you can borrow under the new criteria
- Compare deals across a wide panel of lenders
- Guide you through the process from start to finish, with honest, expert advice
Ready to Take the Next Step?
If you’re considering your first home purchase, now is a great time to explore your options under these new rules.
Book a free consultation, Call 020 3897 8100 or email bhaven@1stff.co.uk for a no-obligation consultation.
This article provides general information only and does not constitute financial advice. For personalised guidance based on your specific circumstances, please contact our office to arrange a consultation. Learn more
