Barclays explains £31,000 boost for homeowners | Personal Finance | Finance

Barclays has lowered the financial hurdles faced by homebuyers, in a move that could see families handed up to £31,000 more to get on – or move up – the property ladder.

The bank has eased the so-called ‘stress tests’ applied to mortgage applications – artificial interest rate hikes designed to test whether borrowers could still afford repayments if rates were to rise.

The tweak means many will now be able to borrow significantly more – with a typical family potentially qualifying for an extra £30,750, Barclays said.

This figure is based on a scenario where a household earns £120,000 a year, carries £10,000 in credit card debt and has monthly commitments of £600, applying for a two- or five-year fixed deal over 35 years.

The change is a lifeline for first-time buyers and growing families squeezed by high prices and stricter lending rules.

Lee Chiswell, head of mortgages at Barclays, said: “We are delighted to increase the amount we can lend to customers looking to buy a home.

“We know there are many challenges facing people right now, whether it’s a first-time buyer trying to pull a deposit together or a family looking to move house.

“Improving our affordability rates could help make many customers’ dream home a reality, while continuing to have strong measures in place to ensure that they can make payments on their mortgage.”

Barclays joins a growing list of lenders rolling back stricter borrowing rules in the wake of criticism from regulators.

The Financial Conduct Authority (FCA) warned in March that banks had been overly cautious, risking locking out buyers who could otherwise afford a loan.

FCA boss Nikhil Rathi told MPs that banks already had flexibility within the rules to ease the burden – but hadn’t used it.

Since then, a slew of big names have taken action. Lloyds Banking Group, which includes Halifax and Bank of Scotland, has made changes allowing customers to borrow £38,000 more on average. HSBC and First Direct have gone further, with boosts of £39,000, while Santander is offering up to £35,000 more.

Nationwide revealed it is cutting its stress rates by up to 1.25 percentage points – enough to lift borrowing by £28,000 for some buyers.

Under the old rules, a borrower on a 4% mortgage might be tested as if rates were 6-7%. That bar has now been lowered.

It comes at a crucial time, with families battling rising rents, high house prices, and cost-of-living pressures.

However, experts warn that just because you can borrow more, doesn’t mean you should. Buyers are urged to consider what level of repayments they’re truly comfortable with – and how they would cope if life circumstances changed.