Nationwide to enable first-time buyers to borrow up to six times income

Nationwide is extending its Helping Hand mortgage to offer first-time buyers the ability to borrow six times income up to 95% loan to value (LTV).

The mutual said that the change enables couples earning £50,000 to borrow £300,000 towards their first home, which is around £75,000 more than with its standard lending criteria.

This helps to “address the affordability challenge that still prevents many people from getting onto the property ladder”, said the UK’s biggest building society.

It’s also boosting its maximum loan sizes up to £750,000 for those taking a mortgage of between 90% and 95% LTV.

The ability to borrow up to six times income up to 95% LTV will only be available on five- and 10-year fixed rates, boosting borrowing power by a third compared to standard lending.

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Debbie Crosbie, Nationwide’s chief executive, 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 at L&C Mortgages, added: “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.”

Matt Smith, Rightmove’s mortgage expert, noted that the move would be most helpful in areas where house prices are very high.

He explained: “It is likely to be particularly beneficial in areas such as London and the South East, where house prices are higher, and currently the average asking price of a home is more than five times the average salary of two people.

“We’ve been highlighting affordability as a key issue facing first-time buyers this year and calling for innovations that help overcome these challenges in a responsible way.”

Lower rates all round

Nationwide is also cutting rates on the vast majority of its fixed rate products by up to 0.31 percentage points.

It has become the first big lender to offer a sub-5% rate at 95% of the property’s value for first-time buyers.

The new rates include:

• Five-year fixed rate at 95% LTV with a £999 fee is 4.99% (reduced by 0.05 percentage points)
• 10-year fixed rate at 75% LTV with no fee is 4.69% (reduced by 0.31 percentage points)
• Five-year fixed rate at 90% LTV with a £999 fee is 4.49% (reduced by 0.1 percentage points)
• Five-year fixed rate at 85% LTV with a £999 fee is 4.19% (reduced by 0.15 percentage points)
• Three-year fixed rate at 90% LTV with a £999 fee is 4.99% (reduced by 0.05 percentage points)

The mutual is also cutting rates for new customers moving home by up to 0.29 percentage points across two-, three-, five- and 10-year fixed rate products up to 95% LTV.

Existing customers moving home will see rate cuts too – of up to 0.29 percentage points across two-, three-, five- and 10-year fixed rate products up to 95% LTV.

Remortgage rates will fall by up to 0.27 percentage points, while switcher rates will reduce by 0.26 percentage points.