High street banks also prepare to assist customers facing rising household bills
Santander UK has reduced its residential affordability rates by up to 0.75%, making it the first major lender to respond to recent guidance from the Financial Conduct Authority (FCA).
The move, which takes effect from today, March 28, allows customers seeking to purchase or remortgage a home to borrow more, with rates now at their lowest since 2022.
The FCA earlier this month called on lenders to tailor their affordability assessments to better meet customer needs in a market where interest rates are gradually falling. Following the change, Santander customers may now be able to borrow between £10,000 and £35,000 more than they could previously, subject to affordability checks and loan-to-income limits.
“Helping customers achieve their homeownership dream is a key priority for Santander, but we know that affordability constraints continue to bite,” said David Morris, head of homes at Santander UK. “We’re thrilled to be the first major lender to respond to the updated FCA guidance, alongside introducing a range of reduced mortgage interest rates today, fulfilling our role as a responsible lender while helping more customers to borrow what they need to release their home aspirations.”
In addition to adjusting affordability rates, Santander, along with other high street lenders such as HSBC and NatWest, is enhancing its support services to assist customers struggling with rising household bills. April’s anticipated increase in living costs has prompted banks to encourage customers facing financial pressure to seek help early.
“We are committed to helping our customers through more challenging times, and would urge anyone who is feeling under pressure ahead of the upcoming April price increases – whether that be with their water bills, energy bills, or everyday finances – to talk to us as soon as possible so we can discuss the best solutions,” Tom Snodgrass, head of financial support at Santander UK, said in a statement reported by the Daily Express.
He added that Santander will monitor customer accounts and may “proactively contact customers that are showing early signs of money struggles,” such as low balances, difficulty meeting mortgage repayments, or reliance on government benefits.
HSBC and NatWest also step up support initiatives
HSBC is also taking steps to identify and assist customers who may be approaching financial hardship.
“We know that finances continue to be squeezed by higher household bills, everyday costs and many people are feeling the pinch,” a spokesperson for the bank said. “HSBC UK has a programme in place for proactively reviewing where hardship might be on the horizon and helping prevent customers from falling into financial difficulty, but we strongly encourage customers not to wait until they are in financial difficulty before seeking help.”
Since launching its cost-of-living hub nearly three years ago, HSBC has recorded over 300,000 visitors to the platform and has had approximately 155,000 attendees at its financial wellbeing webinars since 2020. The bank also facilitated 2.4 million customer interactions in 2024, spanning face-to-face meetings, phone consultations, and digital services.
Similarly, NatWest has implemented measures to assist customers experiencing financial hardship, including freezing interest on forbearance measures and waiving fees for those being supported by its financial health teams.
The FCA has underscored the need for lenders to offer enhanced support to borrowers facing financial challenges amid the UK’s ongoing cost-of-living crisis. Rising energy prices, higher mortgage rates, and increasing everyday expenses continue to strain household budgets.
The regulator expects banks and mortgage lenders to identify vulnerable customers and offer tailored assistance. This includes providing flexible repayment options, suspending fees where appropriate, and maintaining open communication to prevent borrowers from falling deeper into financial distress.
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