Chancellor Rachel Reeves confirms mortgage changes in Mansion House speech
Chancellor Rachel Reeves confirmed in her Mansion House speech last night that new mortgage rules, including changes to loan-to-income limits, are being implemented immediately.
As part of the changes lenders will be able to offer more income stretch mortgages, which means tens of thousands more people should be able to get a mortgage in the next year.
The Chancellor confirmed that she is raising the capital requirements asset thresholds to allow UK banks to lend more, which should “benefit the challenger banks and bring increased competition and innovation to the market.”
Rachel Reeves is also implementing lower capital requirements as part of changes to the Basel 3.1 rules for domestically focused banks, effective from January 2027, as they also aim to attract more international banks. Ringfencing rules are also being revised to address inefficiencies and promote growth.
How will the changes help smaller mortgage lenders?
Paragon Banking Group chief executive Nigel Terrington was quoted as saying the move “provides many mid-tier banks with the capacity to grow without the risk of being drawn into a regime intended for systemically important firms.
Mr Terrington adds: “We also welcome the Prudential Regulation Authority’s decision to review the internal ratings-based process. This needs to be streamlined and accelerated to enable mid-tier banks to compete more actively in the mortgage market, supporting growth and choice for homeowners and landlords.”
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The information contained within was correct at the time of publication but is subject to change.
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