Nationwide, the UK’s biggest building society, is urging the government to lift restrictions on loan-to-income ratios that generally limit borrowing to 4.5 times a buyer’s income.
Nationwide wants a UK law change to allow buyers to take on much larger mortgages. Nationwide, the UK’s biggest building society, is urging the government to lift restrictions on loan-to-income ratios that generally limit borrowing to 4.5 times a buyer’s income.
The banking body has published a Plan for Growth, which proposes a wide range of measures that include reforming prudential regulation to support economic growth, streamlining conduct regulation and delivering a “world-class” payments system.
On mortgages, the trade body said lenders currently struggle under “regulatory constraints on mortgage lending that leave finance out of reach for many prospective homebuyers”.
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Henry Jordan, Nationwide’s director of home loans, said: “Many potential homeowners are left behind by the current rules, which limit borrowing power despite their ability to repay.
“We are at the limits of where we can take our Helping Hand mortgage. If the LTI (loan-to-income) limit were increased by just 20%, we could fund an additional 10,000 first-time buyers over the next year.”
UK Finance’s chief executive, David Postings, said: “The current rules are holding back innovation and investment. We need a system that allows financial services to thrive and grow.”
Last month Nationwide also called on the government to review the existing 4.5 times LTI limit, citing its Helping Hand mortgage, which accounted for 23% of Nationwide’s first-time buyer mortgages last year, which had to be curbed in January to stay within regulatory lending rules.
In January, the Chancellor also wrote to regulators asking them to review lending regulations to boost the mortgage market and help more first-time buyers get on the property ladder.
In 2020, the average loan size for first-time buyers was around £159,000 and in 2024 it was £197,000. For those who benefitted from Helping Hand, the average loan size last year was more than a quarter higher (26%) at around £249,000.