The Financial Policy Committee’s move to relax loan-to-income (LTI) limits has spurred on more activity among first-time buyers, early evidence shows.
There were 11% more first-time buyer loans in Q3 than in the same period of 2024, UK Finance research shows.
Since July 2025 the 4.5+ LTI limit at 15% of new lending has been relaxed for small lenders.
Remortgaging has been the biggest growth area however, with volumes up nearly 50% year-on-year, suggesting that many are in a hurry to cut their mortgage bill by refinancing in a time when the Bank base rate is slowly coming down.
Eric Leenders, managing director of personal finance at UK Finance, said: “Mortgage lending returned to growth in the third quarter after a quieter start to the year, while refinancing also increased as more customers rolled off fixed rate deals.
“Affordability remains tight, but recent regulatory adjustments are helping widen access at the margins, and the FCA’s review raises important questions about how rules could be adapted to support underserved groups such as the self employed.”
Lending to the self-employed has dropped from 15% in 2005 to under 9% today, suggesting that specialist lenders are more hamstrung by the rules than in the past.
Interest-only lending meanwhile has fallen from more than a quarter of lending in 2005 to just 1% – also reflecting tighter standards.
