Santander is quietly shifting the dynamics of UK mortgage lending. In a move that could influence how much buyers can borrow, the bank has adjusted its affordability rules—an initiative that aligns with recent regulatory signals.
According to Lancs Live, this change comes as part of a wider strategy involving guidance from the Financial Conduct Authority (FCA) and government pressure to stimulate the housing market.
Regulatory Response and Strategic Shift
In a coordinated shift, Santander has aligned its lending policy with the latest FCA recommendations aimed at boosting homeownership and market participation. David Morris, Santander UK’s Head of Homes, confirmed the bank’s strategy:
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 today, fulfilling our role as a responsible lender while helping more customers to borrow what they need to release their home aspirations.
This adjustment to lending criteria reflects an effort to adapt to current macroeconomic conditions, where base rate cuts from the Bank of England are not expected until mid-year.
Market Momentum and Borrower Impact
Industry professionals have largely welcomed the decision. Bob Singh, founder of Chess Mortgages, described the change as a pivotal moment:
In a brave move, Santander has loosened affordability criteria in line with the FCA’s wishes. Buyers previously struggling to achieve a certain borrowing level may now get the house of their dreams. With a base rate cut now not expected until the summer, this move will be welcomed by many to ensure the market maintains momentum after the stamp duty rush is over next week. The ability to borrow more could plug the gap and be the tonic the market needs until we see further rate cuts. Other lenders will surely follow suit.
Similarly, Riz Malik of R3 Wealth sees a strategic advantage for Santander :
This will provide a major boost for those looking to buy while we wait for further rate cuts from the hesitant Bank of England. While a lull in the market was expected following the stamp duty rush, Santander could have just reignited it. Santander could now be flooded with applications given their first mover advantage. Considering there were talks of Santander leaving the UK, they have firmly planted their flag. Others will surely follow.
Cautious Optimism Among Advisers
Craig Fish, director at Lodestone Mortgages & Protection, supported the move but with measured expectations:
This is a sensible move by Santander, as lenders have been far too cautious in recent times. The expectation is that rates are on a downward trajectory so it seems excessive to be stress testing at rates which are unlikely to be seen anytime soon, unless something catastrophic happens. I expect other lenders to follow suit, but I don’t expect this to result in a flood of applications to the market.
Katy Eatenton, mortgage and protection specialist at Lifetime Wealth Management, acknowledged both the positive momentum and historical context:
This move by Santander could provide real momentum to the property market, especially if other lenders follow their example as you imagine they will. Though some will fear this could be an ominous step back towards the kind of lending that existed before 2008 and the Global Financial Crisis, I don’t think this is the case. Lenders have long memories and will be very wary of those dark days.
Avoiding Past Pitfalls
Concerns over a potential return to high-risk lending practices have also been raised. Emma Jones, managing director at Whenthebanksaysno.co.uk, issued a cautionary note:
This will no doubt offer a real boost to borrowers but we have to be careful that we do not revert to the Wild West that was the mortgage world in the years leading up to the Global Financial Crisis. More flexibility is welcome but it should not come at the cost of putting borrowers at risk.
For others, the move is less about risk and more about balance. Iain Swatton, director at Exemplar Financial Services, viewed Santander’s decision as a practical step:
This isn’t a return to reckless lending, far from it. Lenders like Santander will be closely monitoring borrower conduct to ensure sustainability. If anything, this is a sensible step towards recalibrating the market. There will always be those who err on the side of caution, but measured risk is necessary to drive growth and accessibility. Hopefully, other lenders will follow Santander’s lead, making it easier for more people to achieve their homeownership goals.
