Santander say they are the first lender to respond to the Financial Conduct Authority’s (FCA) call to increase the amount of money lenders can borrow; and increase the affordability of mortgage for those looking to buy their first home, or move.
The bank says it has reduced residential affordability rates by up to 0.75% bringing them to the lowest levels since 2022 and making it easier for movers to afford higher mortgages. Subject to individual circumstances and affordability checks it means the bank is prepared to lend between £10,000-£35,000 more to borrowers.
David Morris, Head of Homes, Santander UK said:
“Helping customers achieve their homeownership dream is a key priority for Santander, but we know that affordability constraints continue to bite. 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, fulfilling our role as a responsible lender while helping more customers to borrow what they need to release their home aspirations.”
Earlier in March FCA Chief Executive Nikhil Rathi called on lenders to support home ownership by applying greater flexibility in FCA rules and lend to creditworthy customers, in a letter to Economic Secretary to the Treasury Emma Reynolds MP.
The FCA have now published a timeline for the introduction of changes to mortgage guidance and reviewing guidance and requirements following the introduction of Consumer Duty as there is duplication of rules.
In May the regulator will consider making it easier for consumers to remortgage with a new lender; reduce the overall cost of borrowing through term reductions; and review options for consumer to engage firms outside a regulated advice process. In June, it will publish a discussion paper on topics including risk appetite and responsible risk taking, alternative affordability testing and product innovation, lending into later life and consumer information needs.
It has already started reviewing the responsible lending and advice rules for mortgages saying it has received responses saying current mortgage disclosure rule are “too prescriptive” and limited firms’ ability to change information to meet customer needs; including using digital sales channels. The 2025 mortgage rule review discussion paper due to be published in June will include discussion on consumer disclosure requirements within the mortgage sector.
“We have already started reviewing our responsible lending and advice rules for mortgages. This includes looking to simplify our requirements, updating or removing detailed and prescriptive requirements now covered by the Duty, and ensuring we are supporting good customer outcomes Removing some detailed requirements, and relying on the Duty instead, will support innovation.”
said an FCA spokesperson. Sarah Pritchard, executive director of supervision, policy, competition and international at the FCA, added:
“Now the Consumer Duty is in full force we’re making changes quickly where stakeholders want us to, to cut unnecessary costs, support growth, and ultimately help consumers get better outcomes. These proposals are part of our long-term efforts to future-proof our rules, reduce burdens for financial firms and will help the ambitious government targets to cut the cost of regulation.”
