Barclays has made a major change to its mortgage lending rules, which could allow the average customer to borrow almost £31,000 more. 

It has tweaked the affordability test it carries out on all potential borrowers, to check whether they could still meet their mortgage payments if the interest rate went up.

Specifically, it has reduced its ‘stress rates’ – the hypothetical higher rates which customers’ finances are scrutinised against.   

These have been cut for purchase and remortgage customers, meaning a family with two children would potentially be able to borrow up to £30,750 more, Barclays said. 

This is based on a two or five-year fixed mortgage with a 35-year term, and the family having an income of £120,000 per year, credit card debt of £10,000 and other commitments of £600 per month.

The ability to borrow more is especially helpful for first-time buyers, or those looking to trade up the ladder.  

Less stress: Barclays has reduced the stress test rates it applies during mortgage applications

Banks have different stress rates for different types of customer, but they are usually two percentage points or more above their current interest rate. 

If someone was taking out a mortgage at 4 per cent, they might be tested against a rate of 6 or 7 per cent. 

However, many major banks have moved to change this in recent weeks after watchdog the Financial Conduct Authority issued fresh guidance on the subject. 

Last month, Lloyds Banking Group adjusted its stress rates, claiming the typical customer could borrow £38,000 more. This applies to all banks in the group including Lloyds, Halifax and Bank of Scotland.

This was followed by HSBC and First Direct, which made changes to allow customers to borrow £39,000 more on average. 

Santander has also made similar adjustments to offer £35,000 more borrowing. 

Nationwide was the only bank to reveal how much it would cut its stress rates by, saying it would reduce by between 0.75 and 1.25 per cent. 

This, it said, would allow it to offer the average borrower £28,000 more. 

The FCA said that, as interest rates fall, lenders should make sure they are not ‘unduly restricting access to otherwise affordable mortgages’.

Lee Chiswell, head of mortgages at Barclays, said: ‘We are delighted to increase the amount we can lend to customers looking to buy a home. 

‘We know there are many challenges facing people right now, whether it’s a first-time buyer trying to pull a deposit together or a family looking to move house. 

‘Improving our affordability rates could help make many customers’ dream home a reality, while continuing to have strong measures in place to ensure that they can make payments on their mortgage.’

Even if they qualify for a bigger loan, borrowers are advised to think about what level or repayments they are comfortable with, and how they would afford the repayments if their circumstances changed.