Nationwide Building Society has called on the UK government to relax existing mortgage affordability regulations to assist first-time buyers in entering the housing market. Currently, lenders are restricted to allocating only 15% of their total mortgage lending to individuals borrowing more than 4.5 times their annual income. Nationwide advocates for a review of this cap to provide greater flexibility for prospective homeowners.
Proposed changes to loan-to-income caps
Henry Jordan, Nationwide’s Director of Home, stated, “Increasing the loan-to-income lending cap would also enable lenders to support more first-time buyers.” This proposal comes as financial regulators consider reforms to loan-to-income caps and financial stress-testing rules, which currently limit borrowing capacity for first-time buyers. Such changes aim to grant lenders more flexibility, promoting responsible risk-taking among borrowers.
Nationwide’s commitment through the Helping Hand scheme
Nationwide has been proactive in supporting first-time buyers through its Helping Hand mortgage initiative, launched in April 2021. This scheme allows borrowers to access up to six times their income, with a maximum loan-to-value (LTV) of 95%. In 2024, Helping Hand accounted for 23% of Nationwide’s first-time buyer mortgages, with the average loan size for participants being approximately £249,000—26% higher than the typical first-time buyer loan.
Government’s response and future plans
In alignment with Nationwide’s recommendations, the government has expressed intentions to support first-time buyers. City Minister Emma Reynolds commented, “Simplifying responsible lending rules and putting in place a permanent mortgage guarantee scheme shows our commitment to making the dream of owning a home a reality.” The proposed permanent mortgage guarantee scheme aims to enable purchases with just a 5% deposit, further facilitating homeownership for young families and renters.
These collaborative efforts between financial institutions and the government are poised to create a more accessible pathway to homeownership, addressing longstanding affordability challenges faced by first-time buyers.
