The recent Stamp Duty relief removal is deterring 41% of prospective buyers, raising concerns about falling property demand and declining house prices, according to Mortgage Advice Bureau.
Below, Rachel Geddes, Strategic Lender Relationship Director at Mortgage Advice Bureau, tells us why outdated lending criteria are making homeownership even more challenging. She calls for lenders to embrace innovation—whether by adjusting loan-to-income caps or increasing high-LTV lending—to support aspiring homeowners. With the FCA urging lenders to be less cautious, the pressure is on the industry to step up and rethink mortgage accessibility.
Geddes said: “With 41% of our prospective buyers stating that the latest Stamp Duty changes may prevent them from purchasing a property in the next 12 months, it’s clear we need to pursue other avenues to get more aspiring homeowners into the market. As things stand, today’s relief removal could lead to house prices dropping as demand for properties falls, with an increasing number of first time buyers priced out of the market.
“People’s borrowing abilities, goals, and lifestyles have evolved, yet our lending rules remain static, with many prospective buyers penalised by current stress testing and affordability criteria. From adjusting LTI caps to enhance borrowing power, to providing additional 95%+ LTV lending to help those with smaller deposits, there are so many ways we can get more first time buyers the helping hand they need to become homeowners.
“That being said, it was promising to see the FCA openly criticise lenders as being ‘too cautious’ when approving mortgages for first time buyers. There’s already some level of flexibility with stress testing that isn’t being taken advantage of, and this was rightly called out. All eyes are now firmly on the lender community to take this on board, embracing innovation and a forward-thinking approach to get more first time buyers on the property ladder.
