Nationwide has welcomed the announcement by the Prudential Regulation Authority that could enable lenders to support more customers borrowing at higher loan to incomes.
Any increase to the loan to income (LTI) flow limit will mainly benefit first-time buyers and Nationwide, which provided more loans to first-time buyers in 2024 than any other lender, has confirmed it will apply to increase its lending limit. The additional flexibility could enable Nationwide to lend to an estimated 10,000 more first-time buyers a year.
Until now, there has been a limit on the amount of lending at or above 4.5 times income of no more than 15 per cent of a lender’s total qualifying loans. The move will allow individual lenders to go further, so long as aggregate lending across the sector remains within the 15% limit.
Dame Debbie Crosbie, Nationwide’s CEO, said: “This is good news for first time buyers, and is also a boost to the UK’s housebuilding ambition and the wider economy. We have long argued that relaxing this regulatory restriction will provide confidence to both lenders and housebuilders without materially increasing risks.
“It will help people who struggle to get on the property ladder because high rents and living costs have made saving for a deposit and meeting mortgage affordability tests extremely challenging.
“This is a welcome move and a strong signal that Government and regulators are working together to boost economic growth and competitiveness.”
The vast majority of Nationwide’s high LTI lending is done through its Helping Hand scheme, which allows eligible first-time buyers to borrow up to six times income. This enables maximum borrowing of up to around 33% more than standard lending. Since launch in 2021, Helping Hand has helped close to 60,000 individual first-time buyers onto the property ladder.
Last month, Nationwide increased the maximum loan-to-value on new build houses to 95% in a major boost to housebuilders and the government’s ambition to accelerate housebuilding.
