Every UK homeowner and potential first-time buyers are being urged to be aware to new changes to mortgage rules coming into effect TODAY.
A fresh shake-up starting on August 1 will see a particular affordability test dropped by the Bank of England meaning borrowers could be able to secure larger loans.
Before now, home buyers needed to prove they can afford to pay a rate that is three percentage points higher than the reversion rate, but this test is now being scrapped.
Mark Harris, chief executive of mortgage broker SPF Private Clients, said it could help those struggling to get their foot on the property ladder.
He said: “For example, first-time buyers who have been affording rents far in excess of actual mortgage payments but have failed affordability assessments regardless.”
However, Gemma Harle, managing director at Quilter Financial Planning, warned first-time buyers could still face difficulty despite the change.
She said: “One of the main drivers behind ‘generation rent’ is the fact that house prices have massively outstripped wage growth.
“Due to high house prices, first-time buyers also need very sizable deposits. On top of this, inflation will be eating away at any other savings they have sitting in cash.”