Move expected to help 20,000 more borrowers qualify for a home loan
HSBC UK has revised its affordability calculations, a move expected to help up to 20,000 more applicants qualify for a mortgage.
The change, which takes effect from today, April 22, involves reducing the stress rates used in mortgage assessments, potentially allowing customers to borrow more.
The updated criteria apply across HSBC’s mortgage range, covering both purchase and remortgage applications. By lowering the stress rate — the notional interest rate used to test a borrower’s ability to repay, more applicants may now meet the bank’s affordability thresholds.
The lender said this step could particularly assist first-time buyers. According to HSBC, the average increase in borrowing power for these customers could reach £39,000.
Stress testing remains a key part of the mortgage process, designed to ensure that borrowers can manage repayments even if interest rates rise. However, as rates have stabilised, some lenders have begun adjusting these calculations to better reflect the current market environment.
HSBC’s decision follows similar actions by other major banks, including Halifax, Lloyds Bank, BM Solutions and Bank of Scotland, which recently lowered their own stress rates.
“We understand the challenges faced by people looking to secure a mortgage,” said Oli O’Donoghue, head of mortgages at HSBC UK. “This adjustment to our stress rates, which will directly improve affordability for many aspiring homeowners, reflects our commitment to making homeownership more accessible.
“By carefully reviewing our affordability calculations, allowing more customers to meet affordability criteria and potentially access increased borrowing amounts, we are aiming to ease some of the pressure on prospective buyers so more people can realise their dream of owning their own home.”
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