Home buyers have significantly more money to spend after recent loosening of lending criteria, it has been claimed, with one broker claiming a 50% rise in numbers of buyers with improved buying power.

This follows the recent Financial Conduct Authority decision to enable lenders to be more flexible when working out the payments a buyer can afford.

Previously, mortgage firms would typically stress test someone at rates of 7-8%, but now they can use more realistic rates of around 5-6%, meaning a buyer earning £50,000 could potentially borrow £30,000-£40,000 more than before.

Serious improvements

As a result, research carried out by Mortgage Solutions shows 61% of brokers have witnessed serious improvements in buyer affordability.

Rob Clifford, broker network Stonebridge‘s CEO, claims his firm has recorded a 50% rise in clients with enhanced buying power.

He says: “After years of positive house price growth, the affordability gap was only going one way. The lenders’ shift is opening the door for borrowers to get bigger mortgages.”

Many are buying two or three-bedroom properties they can grow into rather than starting with one-bedroom flats.”

The research revealed that first-time buyers have seen some of the most dramatic improvements in their buying power.

Carmen Green, director at Xpress Mortgages, says it is changing the way they approach the market, as they can now afford larger family homes immediately instead of trading up later.

She says: “Many are buying two or three-bedroom properties they can grow into rather than starting with one-bedroom flats.”

And Nicholas Mendes at John Charcol says first-time buyers previously rejected for loans are now qualifying. “Small rate reductions are enough to unlock affordability for this crucial market segment.”