New mortgage rules let first-time buyers borrow up to seven times their income
Recent regulatory relaxations now permit first-time homebuyers to obtain mortgages as high as six-to-seven times their annual earnings, though lenders still impose strict eligibility criteria.
Regulators have eased previous caps that restricted new mortgages to roughly 4.5 times a borrower’s income, allowing lenders to extend credit up to six or seven times annual earnings. This shift responds to rising house prices that have outpaced wage growth, making larger loans the only viable path for many prospective owners. Mortgage specialists note that while the broader borrowing power could help renters and those staying with family, it is not suitable for everyone due to the heightened debt burden.
To qualify, buyers need a clean credit record, a regular salaried job, adequate savings for a deposit, and must accept longer-term interest rates. Lenders may tighten standards if economic conditions worsen, so borrowers are advised to keep a financial cushion. Experts caution that personal circumstances such as job loss or health issues could quickly jeopardize repayment ability.
Why it matters
Easing loan-to-income limits could make homeownership attainable for more first-time buyers, but also raises debt-service risks.
In this story