Barclays mortgage customers can now borrow SIX times their salary – but experts warn them not to overstretch

Home buyers can now borrow as much as six times their salary on a mortgage with Barclays, as it becomes the latest bank to loosen its lending limits.

Stretched borrowers will welcome the change, which could help them get on the property ladder, or buy a home in a better location or with an extra bedroom.

But brokers are warning families not to stretch their monthly budgets amid heightened costs, rising unemployment and inflation.

The bank has hiked its maximum loan to income ratio from 5.5 times household income to six – but there are strict conditions to be able to borrow this much.

Borrowers must have a combined joint income of £75,000 or higher, a maximum loan-to-value of 85 per cent and have a repayment mortgage.

A slew of other lenders have also increased the amount that buyers can borrow in recent months after regulators eased rules which has capped banks’ lending ability.

Bigger budget: But brokers are urging caution as some buyers could overstretch themselves

Property price tags remain high at £273,000, according to the Office for National Statistics, which means building a healthy deposit for a dream home is increasingly difficult.

However, Shaun Sturgess, of Sturgess Mortgage Solutions, warned: ‘On the surface, this looks like welcome news for borrowers struggling with affordability. 

‘But people should beware of stretching further at a time when household budgets are already under pressure and the wider cost-of-living picture hasn’t improved.

‘I’ve seen first-hand what happens when lenders over-extend: mortgages look affordable on completion day, then become unmanageable the moment circumstances shift.’

Sticky inflation, which remained at 3.8 per cent last month, is pushing household budgets to their limits. Add in mortgage rates which are still high and suddenly stretching borrowing, which will hike monthly mortgage repayments, doesn’t seem so smart.

Patricia McGirr, of Reposession Rescue Network, said: ‘Stretching borrowers further in a fragile cost‑of‑living climate risks creating vulnerability rather than security. True affordability isn’t just about bigger multiples, it’s about sustainable lending that protects households when circumstances change.

‘Assisting buyers must go hand‑in‑hand with prudence, otherwise today’s opportunity becomes tomorrow’s repossession story.’

These experts are urging borrowers to consider how this will impact their monthly spending going forward.

Dariusz Karpowicz, at Albion Financial Advice says your monthly mortgage payment shouldn’t be more than 30 per cent of your take home pay.

He said: ‘Add council tax, utilities, insurance and maintenance for the full picture. Barclays’ £75,000 minimum income targets higher earners, but even they need breathing room. Interest rates could rise, your boiler might fail, your car could need replacing.’

However, Aaron Strutt at brokers Trinity Financial, claims the change is good news borrowers.

‘The banks obviously think that their customers are struggling to get sufficiently large mortgages to get the properties they want and they are reacting accordingly,’ he said.

‘It is good to see these sort of multiples being introduced and major lenders targeting higher earners who are buying their next home, as income stretches have been mainly available for first-time buyers.’

He thinks other lenders will soon follow suit as competition heats up between lenders.

Plus, allowing buyers to borrow more may be the spark needed to inject some movement into the currently stagnant market.

Sturgess added: ‘This higher loan-to-income ratio might stimulate activity in the short term, but long term it risks fuelling price inflation and increasing financial vulnerability for buyers.’

The property market is currently stale as both buyers and sellers sit on the sidelines ahead of the Autumn Budget.

There are a flurry of property tax rumours – including an overhaul of the stamp duty regime and a change to council tax – which is prompting movers to wait until they know more as these potential tax changes could cost them thousands of pounds.

But if buyers can borrow thousands of pounds more, it could lure them back into the lifeless market.

Emma Jones, of broker When The Bank Says No, said: ‘Lenders are doing their utmost to get the market moving at present. Transaction levels have been muted in the run-up to the Budget, understandably so given the noises emerging from Number 11.

‘But just because you can borrow this much doesn’t mean you should, so always seek advice.’