Huge Increase in Bigger Mortgages as Lenders Relax Rules

Stonebridge research has found that the average amount borrowed in May 2025 was £11,500 higher than in April as mortgage lenders loosen their criteria.

• Interest rates look likely to fall at some point this year.
• Average earnings are up resulting in the average mortgage now being £205,882.
• The government has launched a permanent ‘high loan to value’ low deposit mortgage guarantee scheme to protect lenders when offer 95% LTV mortgages.
• The Prudential Regulation Authority (PRA and part of the Bank of England) and the Financial Conduct Authority (FCA) early this month announced that they were relaxing the proportions of high LTI (Loan to Income) multiples and more 5 X income + mortgages would be allowed.

See High Loan to Income

Comment

There will be even greater increases in the amounts borrowed in June, July August as interest rates may fall and, the government guarantee comes into play as well as higher LTI multiples allowed.

We fear for another banking crisis as lenders become exposed to higher risk/toxic debt although it will be the government that will be exposed given the guarantee.  Wait a minute! Wasn’t this what happened in 2007 with the government bailing out banks?