Nationwide is giving first-time buyers a major boost by lending up to six times income. The move - the first by a major high street lender - helps address the affordability challenge that still prevents many people from getting onto the property ladder.
Britain’s biggest building society will extend the maximum Loan-to-Income (LTI) ratio available through its Helping Hand – the mortgage boost for first-time buyers launched in 2021. The extended Helping Hand mortgage will be available from Tuesday 24 September and will give first-time buyers the option of borrowing up to six times income when taking a five or ten-year fixed rate up to 95% Loan-to-Value (LTV). This will give potential homeowners a 33 per cent uplift versus Nationwide’s standard lending at 4.5 times income.
The change means a first-time buyer couple with a joint income of £50,000 can now borrow up to £300,000 with Helping Hand, compared to c£225,000 without, an increase of £75,000, assuming a five per cent deposit and no other costs impact affordability.
In further support to first-time buyers, Nationwide is also cutting mortgage rates. First-time buyer rates will be reduced by up to 0.31 percentage points, making Nationwide the first major lender to offer a sub-5% rate on its standard range to those with a five per cent deposit1. These market-leading rates will also be effective from Tuesday 24 September.
This latest move from Nationwide is aimed at supporting the government’s housing ambitions and shows the value of being part of a modern mutual that is run for the benefit of its members. Since 2021, Nationwide has lent more than £7.5 billion through Helping Hand – supporting around 40,000 people onto the property ladder.
Nationwide is also increasing its maximum loan sizes, including those above 90% LTV, which will increase from £500,000 to £750,0002. This change is also effective from Tuesday 24 September. According to UK Finance data, around five per cent of all house purchase loans were over £500,000 in the six months to June 2024 - a figure even higher in London (22%).
Debbie Crosbie, Nationwide’s Chief Executive, said: “Helping Hand has supported around 40,000 people onto the property ladder since we launched it three years ago. We want to do more and are boosting the scheme to six times income and increasing the maximum loan size. This, alongside our most recent rate cuts, further strengthens our market-leading position and demonstrates that, as one of the UK’s largest lenders, Nationwide continues to put first-time buyers first.”
Helping Hand’s widespread appeal: Nationwide’s House Price Index3 shows the average first-time buyer property price in the UK is £226,794. However, this varies widely across the country4. Helping Hand has proved particularly useful in the Outer South East5, where the average first-time buyer house price stands at £262,504, and where uptake of Helping Hand has been highest. (28% of all Helping Hand mortgages and 15% of all Nationwide’s first-time buyer mortgages were recorded in the Outer South East region).
Other regions where Helping Hand has proved popular include (see infographic attached for regional impact):
- London5 – average first-time buyer house price: £452,797 (24% of all Helping Hand mortgages and 10% of all Nationwide’s first-time buyer mortgages in Greater London).
- South West5 – average first-time buyer house price: £247,709 (12% of all Helping Hand mortgages and 10% of all Nationwide’s first-time buyer mortgages in the South West).
Since April 2021, the average loan size for first-time buyers without Helping Hand is £168,699, whereas for those benefitting from Helping Hand, the average loan size is c.60% higher (£269,169).
Helping Hand continues to have wide appeal as it will still be available for those on standard incomes, with sole applicants only needing a minimum income of £30,000 to benefit, while joint applicants will need a minimum combined income of £50,000.
All Helping Hand applications will continue to be subject to robust underwriting checks, including full assessment of credit score and additional credit commitments, to ensure Nationwide lends responsibly.
David Hollingworth, Associate Director, Communications at L&C Mortgages, said: “Helping Hand has been a front runner in expanding the range of options open to first-time buyers who continue to struggle with affordability. Building an adequate deposit is hard enough especially when the available mortgage borrowing is capped, and prices remain high. Opening the potential for higher borrowing amounts for the right borrowers will help target the twin challenges that first-time buyers face across the UK. Using the existing experience and success of Helping Hand to further enhance the maximum multiple will give more prospective first-time buyers the hope that ownership can become a reality.”
Matt Smith, Rightmove’s Mortgage Expert said: “This package of measures is an encouraging development in the first-time buyer market, as it directly addresses a major barrier that many face in being able to borrow enough to take that important first step on the housing ladder. It is likely to be particularly beneficial in areas such as London and the South East where house prices are higher, and currently the average asking price of a home is more than five times the average salary of two people. We’ve been highlighting affordability as a key issue facing first-time buyers this year and calling for innovations that help overcome these challenges in a responsible way. We welcome this move and hope this is the start of a new and accelerated wave of support for first-time buyers. The timing of this announcement will be welcomed by many first-time buyers, as we’re seeing a much more active housing market than at this time last year, with buyer demand increasing into the traditionally busy Autumn season.”
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