Buying your first home can come with a long list of questions, and one of the most common is about how much you can borrow. For many first-time buyers, income limits and affordability check often narrow their options more than expected.
Recently, the Bank of England made a change that could make a difference. The update gives lenders more flexibility to offer mortgages that are slightly higher in relation to a buyer’s income. It doesn’t mean borrowing rules are being relaxed across the board, but it does mean that some first-time buyer mortgage applications that might previously have been declined could now be considered.
Here’s what’s changed, how it relates to mortgage rates in the UK, and what it could mean for anyone planning to buy their first home.
What’s changed?
Until now, lenders had limits on how many higher loan-to-income (LTI) mortgages they could approve. These are mortgages where the loan amount is more than 4.5 times the buyer’s annual income. The cap was in place to maintain responsible lending.
This rule has now been adjusted, and lenders can accept a slightly higher share of these applications. The goal is to better reflect how house prices and wages have shifted, particularly in areas where the gap between income and property value has widened.
This may help first-time buyers who have a reliable income but have found borrowing limits to be just below what they need. The change won’t affect everyone, and standard affordability checks still apply, but it creates more flexibility in how mortgage applications are assessed.
What this means for first-time buyers
If you’re in the early stages of planning to buy, or if you've recently had a mortgage decision that didn’t quite go in your favour, this update might be worth a second look. It’s not about borrowing more than you can afford - it’s about giving lenders a little more discretion to assess applications that fall slightly outside previous limits.
This could benefit some first-time buyers who have been saving and budgeting carefully but haven’t quite reached the amount needed for a property in their chosen area.
Mortgage rates in the UK: a more stable picture
Alongside the changes in lending rules, mortgage rates UK wide have become more stable. After a period of volatility, there’s been a gradual easing in rates offered by many lenders, particularly on fixed-term deals.
The average mortgage rate for two-year fixed products has fallen compared to the peak seen last year. While rates remain higher than those seen during the post-2020 period, the shift has brought more predictability into the process. This can help buyers manage their monthly costs more confidently when comparing mortgage options.
Choosing a first-time buyer mortgage
There’s no one-size-fits-all solution when it comes to choosing a first-time buyer mortgage. The right product depends on your income, deposit size, monthly budget, and future plans.
With lenders now having more room to consider higher loan-to-income applications—and with mortgage rates showing signs of steadying, it could be a good time to explore what’s available. Whether you're buying alone or with a partner, it’s worth reviewing the latest offers and, if needed, speaking with a regulated mortgage adviser who can guide you through the current options.
What to keep in mind
These updates won’t change the process for everyone, but they do offer more flexibility for those who are close to being ready. For many first-time buyers, the combination of slightly more generous lending rules and more stable mortgage rates offers a more encouraging environment to make decisions with clarity.
If you’ve been reviewing your finances or waiting for the right time to move forward, this may be a good opportunity to take a fresh look at your borrowing options and what’s possible based on your current circumstances.
If you’d like advice or support, get in touch with us at Prime Choice, we’re always happy to help.
