One of the UK’s largest mortgage lenders has relaxed its rules and will offer some borrowers up to £35,000 more to fund their home purchases.

Santander said it had adjusted the way it calculated affordability, meaning many customers applying for a mortgage would be able to borrow between £10,000 and £35,000 more from Friday.

The move follows calls by the City regulator, the Financial Conduct Authority (FCA), for lenders to look at their approach to make sure the testing they carry out on borrowers is not “unduly restricting access to otherwise affordable mortgages”.

Under Santander’s changes, a first-time buyer couple earning £49,500 between them may be able to borrow £210,352 on a two- or three-year fixed-rate mortgage – almost £14,000 more than previously.

A couple moving up the housing ladder and earning a total of £63,500 may be able to borrow £305,326 on a five-year fixed-rate mortgage – a rise of almost £21,000.

Santander’s existing mortgage customers looking to borrow more will potentially benefit most from the changes.

In the years after the financial crisis in 2008, mortgage lenders introduced strict rules on borrowing to ensure people were not granted unaffordable loans. Part of this involved adding a stress test, which checks that the repayments are affordable even if lenders put up their mortgage rates.

The rates used for the tests have always been higher than the typical rates paid by borrowers, and increases in the Bank of England base rate in recent years have pushed them up and reduced the sums available to customers.

Santander said it had reduced the rate it will stress test at by up to 0.75 percentage points. It was previously checking payments were affordable at 1 percentage point above its standard variable rate of 6.75%, but has reduced that to between 6% and 7%.

David Morris, the head of homes at Santander UK, said: “Helping customers achieve their home ownership dream is a key priority for Santander, but we know that affordability constraints continue to bite.

“We’re thrilled to be the first major lender to respond to the updated FCA guidance, alongside introducing a range of reduced mortgage interest rates today, fulfilling our role as a responsible lender while helping more customers to borrow what they need to release their home aspirations.”

David Hollingworth, an associate director at the mortgage broker L&C, said it was a positive move but the bank was not “throwing off all limits”, and caps on how much was borrowed relative to someone’s income would still apply.

“This could be a boost for those looking to buy and in need of a higher borrowing amount. For some it could put a purchase within reach where it had previously looked just out of touching distance,” he said.

“Loan to income caps will still apply so we won’t see the maximum rocket for those that already have good affordability.”