Why lending criteria are shifting - and what it says about the market

Lending criteria do not change without reason. Every tweak tells us something. It does not just highlight a lender’s risk appetite, but reflects what is happening in the market at large.

Our recent criteria updates offer a clear example of how lenders, such as ourselves, are adjusting to new conditions. Not in dramatic ways, but through small, thoughtful steps that suggest greater confidence in the direction of travel.

As we move further into 2025, the pressure on interest rates seems to be easing. The Bank of England cut the base rate from 4.75% to 4.5% in February, its lowest level since June 2023. At the most recent Monetary Policy Committee meeting on 19 March, eight members voted to keep the rate unchanged.

Inflation is still a factor, but the tone has clearly shifted. In the March 2025 Spring Statement, Chancellor Rachel Reeves indicated that the Office for Budget Responsibility (OBR) forecasts Consumer Price Index (CPI) inflation to average 3.2% this year, with a projected decline to 2.1% in 2026. That has filtered through to lenders. We are certainly not in a boom, but we are in a different environment to last year.

Our criteria changes are not about going back to pre 2022 conditions. They are about making sensible adjustments that reflect today’s realities. Here is what they tell us.

Increasing debt consolidation loan-to-value in a more stable market

Timing matters. The decision to raise the LTV cap to 90% for debt consolidation, for instance, is not just a product tweak. It signals greater trust in the current lending backdrop. But it is a cautious move, not a free for all.

Affordability remains a concern. ONS data released in February showed that mortgage payment to income ratios are still well above long term averages. In this context, flexibility in lending criteria is not a luxury. It is a necessity.

While the cost of living crisis has slipped out of the headlines, the after effects have not fully dispersed. Rising prices over the past two years have left many borrowers with stretched budgets and higher levels of personal debt.

Mansfield’s return to 90% LTV for debt consolidation reflects this shift. It is not about encouraging more borrowing, but about helping homeowners restructure what they already owe and providing a route to more manageable finances at a time when options are still limited for many.

Family support in credit repair cases

Gifted deposits have long been a feature of the housing market, but allowing them in cases involving historic credit issues is a notable change. It reflects a growing trend: family support is not just helping younger, well positioned first-time buyers, it is far more widespread.

Data from Legal & General’s Ignite platform, published in April, show that broker searches for first-time buyers rose by 45% in Q1 2025 compared to the previous quarter. This spike in activity is likely linked to the changes to Stamp Duty Land Tax that came into effect on 31 March, prompting a flurry of interest from would be buyers.

With many of these buyers still reliant on family support to get onto the ladder, especially in the face of affordability constraints or previous credit blips, lenders need to respond. Our criteria update acknowledges this shift, recognising that family help is now a crucial part of the puzzle for a more diverse pool of first-time buyers.

Simplifying downsizing for older borrowers

By standardising the minimum equity requirement for downsizing to £200,000 across the UK, down from £300,000 in London, we are removing a barrier that has stood in the way for many would be movers.

It is a change that makes sense, particularly for homeowners in the capital who are looking to release equity and move to more manageable properties outside the capital. With more borrowers falling into the “equity rich, income poor” category, flexibility around downsizing is likely to become more important.

A more pragmatic approach to later life buy-to-let

The removal of the maximum age cap for buy-to-let lending signals a shift in how older borrowers with investment properties are perceived. Rather than being seen as higher risk, they are increasingly recognised as serious investors. As more people turn to property to supplement retirement income, lenders are recognising that investment lending needs a different perspective.

The appeal of property as a long term investment remains resilient, particularly for those looking to diversify their income later in life.

Real life lending criteria

Taken together, these updates show that we are responding not just to economic signals, but to real world borrower needs. There is no sweeping overhaul here, just measured, sensible decisions in response to the market.

It is a reminder that criteria do not just serve risk management, they also shape access. And in 2025, with affordability under pressure and cautious optimism returning to the market, flexibility matters more than ever.

At Mansfield, we are tuned into both the wider economic picture and the everyday realities facing borrowers across the UK, and we believe this kind of awareness is exactly what the market needs right now.