Nationwide has called on the government to relax mortgage affordability rules to boost first-time buyer lending.
Currently, lenders can only allocate 15% of their total mortgage loan book to people borrowing more than 4.5 times their annual salary.
To help more first-time buyers, Nationwide is calling on the government to review this cap.
“Increasing the loan-to-income [LTV] lending cap would also enable lenders to support more first-time buyers,” said Henry Jordan, Nationwide’s director of home.
It is believed that financial regulators are looking at allowing lenders greater flexibility to permit responsible risk-taking from borrowers.
Among the proposed changes are believed to be reforms to loan-to-income caps and financial stress-testing rules that limit how much first-time buyers can borrow, which would be welcome news to mortgage lenders including Nationwide, which has emerged as the UK’s top lender for first-time buyers, offering more mortgages to those getting onto the housing ladder than any other bank or building society.
The lender provided more than 180,000 mortgages over the year – with over a third going to first-time buyers on the back of deals allowing people to borrow up to six-times income through its Helping Hand mortgage boost, which enables higher loan to income lending and a maximum of 95% LTV. Nationwide is the only major provider to offer this level of lending helping to address the challenge of building a deposit and affordability.
Helping Hand launched in April 2021 and accounted for 23 per cent of Nationwide’s first-time buyer mortgages in 2024. In 2020, the average loan size for first-time buyers was c£159,000 and in 2024 it was c£197,000. For those who benefitted from Helping Hand, the average loan size last year was over a quarter higher (26%) at c£249,000.
Jordan commented: “We believe it’s important to put first-time buyers first given how tough it is to get on the housing ladder. Our enhanced Helping Hand mortgage is extremely popular with first-time buyers and we are committed to finding new ways to ease affordability.”
