"Regulations limit the number of high loan-to-income mortgages that lenders can offer to no more than 15% of total new loans. "
- A Nationwide spokesperson
Nationwide has increased the minimum income requirement for sole applicants on its Helping Hand mortgage range from £35,000 to £40,000.
The Helping Hand mortgage allows first-time buyers to borrow up to six times their income when taking a five or ten-year fixed rate up to 95% LTV, enabling them to secure loans up to 33% higher than under Nationwide's standard lending criteria.
The minimum income for joint applicants has stayed the same, at £55,000, although this has increased from £50,000 when the range first launched in 2021.
A Nationwide spokesperson said: "The ability to borrow enough on a mortgage remains a significant hurdle to first-time buyers attempting to purchase a home of their own.
"We remain committed to tackling that through Helping Hand, which we extended in September to give first-time buyers the opportunity to borrow up to six times income.
"However, regulations limit the number of high loan-to-income mortgages that lenders can offer to no more than 15% of total new loans.
"This small change will ensure that we can remain within that limit, especially given the strong demand we continue to see for Helping Hand. We will continue to keep the minimum income requirements under regular review."
Two weeks ago, the FCA's chief executive announced that it would begin to simplify lending rules for mortgages, "supporting home ownership and opening a discussion on the balance between access to lending and levels of defaults".
Commenting, Arjan Verbeek, CEO of mortgage lender Perenna, said: “If the reports are right, we may finally be seeing regulators and government alike wake up to the fact that too much regulation can also damage consumer outcomes, rather than support them – and in doing so, undermine growth. The mortgage market is a case in point.
“If we want to build a nation of homeowners, it is critical to regularly review and revise regulations that whilst protect the system from risk, stop the market from serving credit-worthy first-time buyers. The LTI flow cap sticks out like a sore thumb. It acts as a handbrake on today’s mortgage market, stopping credit from reaching those who will benefit from it most.
“Lenders can usually only provide above 4.5x loan to income for c.15% of their loan books, meaning the level of high LTV and LTI lending required to tackle the housing affordability crisis simply cannot exist. Without change, many more people will stay renting rather than become homeowners. Amending or removing the LTI to reflect the products in the market like long-term fixes minimises the risks the regulators are concerned with and would be a gigantic leap forward for the hundreds of thousands of frustrated first-time buyers shut out of the market.”
