HSBC has become the first major British lender since the financial crisis to offer homebuyers loans worth up to 6.5 times their salary, signaling an easing of mortgage lending rules across the banking sector.
The new deal, launched this week for HSBC Premier account holders, increases the maximum income multiplier available for home loans beyond that of all other major banks. To qualify, customers must have a deposit of at least 10 per cent and either earn £100,000 a year or hold the same amount in savings or investments with the bank.
The offer represents a significant shift in mortgage policy for the lender, once one of the most conservative in the market. In September, HSBC increased the income cap for first-time buyers to 5.5 times salary; The latest change expands this to include high earners, surpassing rivals such as Nationwide, which lends up to six times income under its Helping Hand scheme, and Halifax, which gives borrowers with larger deposits a cap of 5.5 times income.
Mortgage broker Aaron Strutt of Trinity Financial said the move showed how competitive the market had become. “HSBC has gone from being one of the more conservative lenders to being a more generous lender than virtually any other bank or building society,” he said. “This income-based mortgage is powerful, to say the least, and borrowers really need to think carefully before taking out such a large amount.”
The move comes as the Bank of England, the Financial Conduct Authority (FCA) and the Treasury are encouraging banks to lend more to encourage home ownership. The average house in England is now worth 7.7 times the average full-time salary and 5.9 times in Wales, pushing many first-time buyers out of the market.
Lending rules were tightened in 2016 to prevent a repeat of the risky borrowing seen before the 2008 financial crisis. Under these rules, no more than 15 percent of a bank’s new mortgages can exceed 4.5 times a borrower’s income. According to the Bank of England, around 9.7 percent of loans exceeded this mark in the first quarter of this year.
The bank began reviewing the 15 percent cap in July and has since allowed lenders to apply for temporary exemptions provided the overall industry average remains below the limit. At the same time, new FCA guidelines have led many lenders to cut “stress test” rates, which are used to test whether borrowers can afford higher repayments, effectively allowing larger loans.
While banks argue that higher income multipliers are needed to reflect rising property prices, some experts warn that the government risks encouraging unsustainable borrowing. James Daley, of consumer group Fairer Finance, said the strategy could pile up long-term problems.
“I am very concerned about the current policy priorities set by the Treasury Department,” Daley said. “We all want more people to get on the property ladder, but we could create long-term risks for both borrowers and lenders if we solve the problem by stretching affordability even further.”
He added that the real problem lies in stagnant wage growth and persistently high property values. “The two fundamental issues holding people back are that real wages have been stagnant since the financial crisis while property prices continue to rise,” he said.
HSBC insisted that all loans remain subject to strict affordability checks and that the new limit is designed to support financially secure customers who are struggling to bridge the widening gap between salaries and house prices.
“We remain committed to responsible lending,” the bank said. “All applications will be assessed to ensure customers can comfortably afford their mortgage now and in the future.”
HSBC’s decision reflects a broader trend among British lenders towards more flexible mortgage criteria, as regulators signal a willingness to balance caution and accessibility. With affordability rising to record levels, banks are under pressure to further increase lending volumes – but critics fear the pendulum may be swinging too far back towards pre-crisis habits.
As the Bank of England continues to consider whether to further ease its lending limits, HSBC’s move is likely to set a new benchmark – and reignite the debate about how to make home ownership sustainable at a time of stagnant wages and ever-rising house prices.
