First-time buyers will be able to apply for a mortgage with just a £30,000 salary with Nationwide (NBS.L) as the government and Bank of England (BoE) push for more relaxed lending rules.
The changes comes as chancellor Rachel Reeves is set to reveal the “biggest set of reforms to financial regulation in a decade” at a summit of finance executives in Leeds this Tuesday, as part of the government’s mission to kick start economic growth and support more first-time buyers.
Under the plans, more mortgages will be available at over 4.5 times a buyer’s income following Bank of England recommendations that some banks and building societies offer more high loan-to-income mortgages — creating up to 36,000 additional mortgages for first-time buyers over the first year.
This change means that Nationwide will be able to make its “Helping Hand” mortgage available to people with lower incomes. From Wednesday, eligible first-time buyers can apply for the mortgage with a £30,000 salary, down from £35,000, and joint applicants with a £50,000 combined salary — down from £55,000. This will support an additional 10,000 first-time buyers each year.
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This comes alongside the creation of a permanent mortgage guarantee scheme, ensuring high loan-to-value mortgages continue to be available, as well as a review of Financial Conduct Authority (FCA) lending rules that could allow a prospective buyers’ record of paying rent on time to show they can afford mortgage repayments.
Reeves is expected to say later today: “I welcome the recent changes the Financial Policy Committee has announced to the loan-to-income limit on mortgage lending, which the PRA (Prudential Regulation Authority) and FCA are implementing immediately.
“With an instant impact for consumers, such as Nationwide offering its ‘Helping Hand’ mortgage to more first time-buyers — supporting an additional 10,000 each year.”
Other measures are set to be announced to improve the competitiveness of the UK financial sector under the Leeds Reforms, addressing long-standing industry complaints.
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According to the Treasury, the changes will see Britain become the top destination for finance firms over the next decade, attracting inward investment from across the globe to create good, skilled jobs around the country.
Reeves is expected to say: “This is the foundation of an economy, and a country, that is more active and more confident.
