Borrowers could have access to bigger loans as new mortgage rules force lenders to ditch income multiples and use affordability assessments, experts believe.
The mortgage market review will end the practice of some lenders, mainly building societies, underwriting on the basis of income multiples.
The MMR comes into force on 26 April and will impose tougher affordability checks and income verification requirements.
Last month, brokers expressed shock at the “forensic” level of detail required in Kensington’s new expenditure forms.
But rather than resulting in smaller loan sizes, experts believe the MMR could actually lead to bigger mortgages for some borrowers.
Building Societies Association head of mortgage policy Paul Broadhead says: “There is a shift to affordability among all building societies. They will continue to communicate through the use of income multiples, so intermediaries and borrowers know ballpark figures, but in terms of actual underwriting it will be affordability.
“It means if you live a fairly prudent lifestyle then it could lead to more generous loan sizes.”
John Charcol senior technical manager Ray Boulger agrees. He says: “For people without many financial commitments the MMR could lead to bigger loans.
“If a lender has been using income multiples and is now moving to affordability then, even taking into account other expenditure, they may have a larger maximum loan. Those who end up with a lower loan will have a lot of other financial commitments.”