Building society Nationwide is to allow first-time buyers to borrow up to six times their income for a mortgage.
The move, as part of Nationwide’s Helping Hand scheme, comes into effect today (Tuesday, 24 September).
Nationwide said the move will provide a 33 per cent increase in borrowing potential, compared to its standard offer of 4.5 times income.
A couple earning £50,000, for example, would be able to borrow £300,000 towards their first home, which is £75,000 more than the standard lending cap.
This will apply to mortgages with a loan-to-value (LTV) ratio of up to 95 per cent, a vital lifeline for buyers struggling with affordability.
Nationwide will also be cutting its mortgage rates, making it the first lender to offer a sub-five per cent rate on 95 per cent LTV mortgages for first-time buyers, also effective from 24 September.
Alongside this, Nationwide stated that it raised its maximum loan size from £500,000 to £750,000 for loans between 90 per cent and 95 per cent LTV
The building society added that since April 2021, the average loan size is 60 per cent higher with Helping Hand scheme than without it.
This follows UK Finance data, which showed that around five per cent of all property purchase loans did exceed £5,000 in the six months up until June 2024, a figure which rose to 22 per cent in London.
‘We continue to put first-time buyers first’ – Nationwide boss
Nationwide’s chief executive, Debbie Crosbie, emphasised that the company’s market changes cement its “market leading position” as a leader in supporting first-time buyers. “We continue to put first-buyers first”, she said.
This announcement is timely as buyer interest typically rises in the autumn, with David Hollingworth from L&C Mortgages calling Helping Hand a “front runner” in making home-ownership more accessible.
Rightmove’s mortgage expert, Matt Smith, noted that the package will particularly benefit areas like London and the South East, where high house prices make saving for deposits difficult.
Nationwide’s initiative follows Halifax and Lloyds’ recent decision to increase borrowing caps to 5.5 times annual income, further intensifying competition among lenders to attract first time buyers.