Nationwide has introduced a change to its maximum loan-to-income (LTI) ratio for first-time buyers, which will enable them to borrow up to six times their income.
It is the first major lender to allow borrowing at this level through its Helping Hand range, which launched in 2021.
Since then, Nationwide’s Helping Hand has lent £7.5bn and supported around 40,000 borrowers to get onto the property ladder.
This will be open to sole borrowers with a minimum income of £30,000 or joint borrowers with a minimum combined income of £50,000 up to 95% loan to value (LTV).
The enhanced LTI ratio will be available to borrowers taking a five- or 10-year fixed rate with a maximum loan size of £750,000.
Nationwide said this would boost borrowing by a third compared to its standard LTI of four-and-a-half times income.
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It means joint first-time buyer applications with a combined income of £50,000 can borrow up to £300,000 with a 5% deposit, instead of the previous £225,000.
Debbie Crosbie, chief executive of Nationwide, 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.”
David Hollingworth, associate director of 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.”
Rate and maximum loan changes
Nationwide has also reduced first-time buyer mortgage rates by up to 0.31%, making it one of the first major lenders to offer a sub-5% rate on its standard range for borrowers with a 5% deposit.
This applies to a five-year fix at 95% LTV with a £999 fee, which now has a rate of 4.99%.
Other changes include a fee-free 10-year fix at 75% LTV, which has been reduced by 0.31% to 4.69%. Also across its five-year fixes with a £999 fee, the rate at 90% LTV has been lowered to 4.49% and the 85% LTV option has been cut to 4.19%.
Nationwide has also reduced rates on products for new and existing borrowers moving home by up to 0.29%, and its remortgage rates by up to 0.27%.
This includes a rate of 3.79% for a five-year fix at 60% LTV with a £1,499 fee, open to remortgagors and new and existing homemovers.
The mutual is also increasing its maximum loan sizes, with this rising from £1.5m to £2m for borrowing between 75% and 85% LTV, from £750,000 to £1m at 85% and 90% LTV and from £500,000 to £750,000 at 90-95% LTV.
These changes will be available from 24 September.
