Getting a mortgage in today’s market has been a steep uphill climb—especially for first-time buyers. But a major shift from the Bank of England could change that. This week, the Bank has signalled it will allow more flexibility in higher loan-to-income lending, giving lenders room to approve more mortgages at income multiples above the previous cap. For many aspiring homeowners in South East London and North Kent, this could open long-closed doors.
Traditionally, banks and building societies have been restricted in how many mortgages they can offer at over 4.5 times a borrower's income—a common ceiling that has locked out many renters, even those with stable incomes. Under the new guidance from the Bank’s Financial Stability Report, lenders can now issue more than 15% of their new mortgages at these higher income multiples. While the industry-wide cap remains, this extra flexibility gives institutions more room to support buyers who need a larger mortgage relative to their earnings.
What does this mean in real terms? According to the Bank of England, up to 36,000 more mortgages per year could now be approved under these looser rules. And lenders are already welcoming the change. Nationwide’s CEO, Dame Debbie Crosbie, said the shift would “help people who struggle to get on the property ladder because high rents and living costs have made saving for a deposit and meeting affordability tests extremely challenging.”
Here in our local area, where the average flat in South East London is over £350,000, and houses in parts of North Kent can still exceed £400,000, income multipliers are crucial. For many local renters, saving for a deposit while paying high rents makes traditional mortgage affordability tests unworkable. These new rules could particularly help those in professional roles—teachers, NHS staff, office workers—who are creditworthy but limited by income thresholds.
The Bank’s decision also comes as mortgage costs are beginning to ease. Although 3.6 million UK borrowers still face an average £107 rise in repayments as fixed-rate deals expire, this is lower than the £146 monthly hike that had been expected earlier in the year. On the brighter side, 2.5 million households (28% of mortgage holders) will actually see their payments fall in the next three years as lower interest rates feed through. This improving mortgage environment could signal a more accessible market in late 2025 and beyond.
For sellers, especially those with homes suitable for first-time buyers—like two-bedroom flats or smaller family houses—this is welcome news. With more buyers qualifying for larger mortgages, demand could pick up again at the lower end of the market. Sellers should prepare now by ensuring their property is competitively priced and well-presented, as affordability expands.
For investors, the news is mixed. While greater lending access can help sustain market demand, rising investor competition for entry-level homes may also increase prices over time. However, if lending loosens without runaway inflation, the buy-to-let and resale markets could benefit from greater transaction flow and stability.
Key Takeaways:
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More mortgage approvals: Banks can now issue more high loan-to-income mortgages, helping first-time buyers who were previously shut out.
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Better affordability: Falling interest rates and reduced monthly repayment forecasts mean a more accessible market by 2026.
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Local impact: Buyers in South East London and North Kent could find it easier to step onto the ladder; sellers should prepare for renewed interest.
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Strategic opportunity: Whether you’re looking to buy, sell, or invest, now is a crucial time to assess your options before competition grows.
If you’re thinking about buying your first home, moving up the ladder, or selling in the current market, contact our teamtoday. We’re here to help you navigate the evolving mortgage landscape and get the most from your property goals in South East London and North Kent.