Lloyds Bank and Halifax have announced a new mortgage policy allowing first-time buyers to borrow up to 5.5 times their income, an increase from the previous limit of 4.49 times.
But who will most likely benefit from this new borrowing limit?
Fee-free broker Mojo Mortgages has analysed the average salaries and house prices in the UK’s 80 largest cities to try to calculate how much impact a 5.5 times mortgage policy could have.
The headline stats are that first-time buyers in 27 cities could benefit from Lloyds’ and Halifax’s extended borrowing capacity.
The previous situation meant only three cities in the UK were affordable for solo FTBs on an average wage. With the new policy, this number has surged to 17 cities.
And for couple on average salaries – before this change, 56 cities fell below the previous 4.5 mortgage-to-salary benchmark. Now, an additional 13 cities have become affordable, resulting in 86% of cities being accessible for couples on their city or town’s average salary.
Under the new guideline, Lloyds and Halifax will use a 5.5 times mortgage-to-salary ratio to determine lending amounts. For instance, a prospective buyer earning £30,000 could now potentially secure a mortgage of up to £165,000, compared to the previous limit of £135,000 under the 4.5 times ratio.
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Here are the 14 cities now more affordable for first-time buyers on an average wage:
| City | Average annual salary | Average house price / average deposit | Mortgage-to-salary ratio for 1-person |
| Wigan | £26,704 | £172,593 (£25,889) | 5.49 |
| Liverpool | £30,030 | £193,252 (£28,988) | 5.47 |
| Coventry | £36,199 | £231,793 (£34,769) | 5.44 |
| Doncaster | £27,015 | £170,399 (£25,560) | 5.36 |
| Barnsley | £27,477 | £168,832 (£25,325) | 5.22 |
| Gateshead | £25,833 | £153,892 (£23,084) | 5.06 |
| Bradford | £26,577 | £157,687 (£23,653) | 5.04 |
| Sunderland | £26,022 | £153,750 (£23,063) | 5.02 |
| St Helens | £26,659 | £154,749 (£23,212) | 4.93 |
| Stoke-on-Trent | £26,834 | £155,392 (£23,309) | 4.92 |
| Darlington | £26,509 | £152,010 (£22,802) | 4.87 |
| Aberdeen | £33,300 | £189,230 (£28,385) | 4.83 |
| Blackpool | £24,370 | £136,857 (£20,529) | 4.77 |
| Blackburn | £26,777 | £148,509 (£22,276) | 4.71 |
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And here are the cities now affordable for FTB couples on average wages:
| City | Average annual salary | Average house price / average deposit | Mortgage-to-salary ratio for 2 people |
| Sutton Coldfield | £31,168 | £397,113 (£59,567) | 5.41 |
| Bournemouth | £28,328 | £356,688 (£53,503) | 5.35 |
| Chelmsford | £31,017 | £388,487 (£58,273) | 5.32 |
| Exeter | £27,465 | £343,862 (£51,579) | 5.32 |
| Eastbourne | £26,449 | £317,239 (£47,586) | 5.10 |
| Bristol | £31,610 | £377,052 (£56,558) | 5.07 |
| Maidstone | £29,295 | £336,013 (£50,402) | 4.87 |
| York | £29,225 | £335,002 (£50,250) | 4.87 |
| Basildon | £28,512 | £322,845 (£48,427) | 4.81 |
| Solihull | £31,383 | £351,911 (£52,787) | 4.77 |
| Bedford | £29,020 | £319,409 (£47,911) | 4.68 |
| Colchester | £28,620 | £308,227 (£46,234) | 4.58 |
| Basingstoke | £33,427 | £358,759 (£53,814) | 4.56 |
A spokesperson for Mojo Mortgages says: “It’s important to be aware of the risk too. Whilst being able to borrow more may allow more aspiring first-time buyers to purchase their first home, higher borrowing limits come with higher monthly mortgage repayments. And given that mortgage rates are still significantly higher than they were a few years ago, it’s key that first-time buyers ensure that their payments are manageable. “There’s also the risk that increased borrowing capacity could lead to rising house prices as demand grows, which could diminish the overarching goal of affordability for first-time buyers. Despite these challenges, the overall outlook is optimistic. With mortgage rates beginning to lower following the Bank of England’s recent base rate announcement, there is hope that these changes will create a more favourable environment for first-time buyers.”
