Nationwide has called on the government to relax mortgage affordability rules to boost first-time buyer lending.
Currently, lenders can only allocate 15% of their total mortgage loan book to people borrowing more than 4.5 times their annual salary.
To help more first-time buyers, Nationwide is calling on the government to review this cap.
“Increasing the loan-to-income [LTV] lending cap would also enable lenders to support more first-time buyers,” said Henry Jordan, Nationwide’s director of home.
It is believed that financial regulators are looking at allowing lenders greater flexibility to permit responsible risk-taking from borrowers.
Among the proposed changes are believed to be reforms to loan-to-income caps and financial stress-testing rules that limit how much first-time buyers can borrow, which would be welcome news to mortgage lenders including Nationwide, which has emerged as the UK’s top lender for first-time buyers, offering more mortgages to those getting onto the housing ladder than any other bank or building society.
The lender provided more than 180,000 mortgages over the year – with over a third going to first-time buyers on the back of deals allowing people to borrow up to six-times income through its Helping Hand mortgage boost, which enables higher loan to income lending and a maximum of 95% LTV. Nationwide is the only major provider to offer this level of lending helping to address the challenge of building a deposit and affordability.
Helping Hand launched in April 2021 and accounted for 23 per cent of Nationwide’s first-time buyer mortgages in 2024. In 2020, the average loan size for first-time buyers was c£159,000 and in 2024 it was c£197,000. For those who benefitted from Helping Hand, the average loan size last year was over a quarter higher (26%) at c£249,000.
Jordan commented: “We believe it’s important to put first-time buyers first given how tough it is to get on the housing ladder. Our enhanced Helping Hand mortgage is extremely popular with first-time buyers and we are committed to finding new ways to ease affordability.”
Contact one of our highly experienced mortgage advisors today on 0121 500 6316 to discuss your mortgage needs.
