Mortgage rule changes could help thousands of first-time buyers
Access to mortgages may become easier for first-time buyers following a major change in lending rules backed by the Bank of England and key regulators.
The Bank has recommended that lenders be given more flexibility to offer mortgages above the traditional cap of 4.5 times a buyer’s income. While a strict industry-wide limit still prevents more than 15% of all new mortgages from exceeding that threshold, individual banks and building societies are now allowed to issue a greater proportion of these higher loan-to-income mortgages from within their own lending books – giving them more freedom to support first-time buyers.
One of the first major lenders to act on the recommendation is Nationwide, which has announced it will ease the income criteria on its ‘Helping Hand’ mortgage product. Single applicants can qualify with a salary of £30,000, down from £35,000, while joint applicants can now apply with a combined income of £50,000, instead of £55,000. The move is expected to help an extra 10,000 people a year onto the housing ladder.
Nationwide says the change will allow eligible borrowers to access loans of up to six times their income – up to 33% more than standard lending – offering a vital boost to people struggling to buy due to rising rents and living costs. The building society has already helped around 60,000 first-time buyers through the scheme since its launch in 2021.
Henry Jordan, Director of Home at Nationwide, said the change “unlocks lending for first-time buyers at what remains a difficult time for homeownership” and could also support housebuilding by encouraging demand.
The Bank of England estimates that up to 36,000 additional high loan-to-income mortgages could now be issued each year. The reforms come at a time when millions of existing homeowners are facing higher monthly payments as fixed-rate deals expire, although falling interest rates are starting to ease pressure on some households.
Overall, the regulatory changes signal a shift towards supporting homeownership in the UK – particularly for younger buyers – by allowing more flexibility in mortgage approvals without removing financial safeguards.
While not without risk, the move is widely seen as a cautious but meaningful step towards tackling the growing difficulties faced by first-time buyers trying to access the housing market.
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