Borrowers get access to larger mortgages as lenders loosen limits

22 July 2025

Borrowers selected significantly larger mortgages in May after a host of lenders loosened their loan limit criteria in line with FCA strategy, new analysis from Stonebridge reveals.

The mortgage and protection network’s latest bi-monthly Mortgage Affordability Index shows the average loan size jumped by more than £11,500 to £205,882 between April and May.

The rise coincided with several high street lenders adjusting their stress testing calculations, enabling them to offer larger loans to borrowers.

As a result, affordability dipped in May, with mortgage repayments accounting for 38.9% of the average borrower’s salary, up from 37% in April. This is despite modest improvements in both wages (+0.45% month-on-month) and mortgage rates (down 2 basis points to 4.47%).

Stonebridge’s Mortgage Affordability Index combines official wage and mortgage rate statistics with its own mortgage transactions data to determine the relative affordability of mortgage finance in proportion to the average borrower’s earnings.

Stonebridge is one of the largest independent mortgage and protection networks in the UK, arranging more than £13 billion of mortgage lending each year.

Rob Clifford, Chief Executive at Stonebridge, commented:

“Mortgage sizes jumped significantly in May as borrowers took advantage of lending criteria changes from several high street lenders. It was pleasing to see wages edging higher and mortgage rates dipping, but those gains weren’t enough to offset the impact of consumers choosing to borrow more, pushing repayments to nearly 39% of the average salary.

“The big question now is whether this marks a temporary uptick in borrowing and cost or a more lasting shift in how much borrowers are prepared to take on. If it’s the latter, we could be entering a phase where higher borrowing levels become the norm, with long-term affordability stats reflecting that choice – after all, this affordability change isn’t driven by rates rising but by consumer behaviour following regulatory changes.”

“With more lenders raising LTI caps and easing affordability rules, brokers are seeing renewed momentum in the market, particularly among higher earners and professionals, who now qualify for larger loans. That’s opening the door for conversations with customers who may have held back earlier in the year.

“This is a real opportunity for brokers to re-engage, revisit pipeline cases and add value by helping customers understand what’s now possible.”

Stonebridge’s Mortgage Affordability Index: