Nationwide Building Society has increased its maximum loan-to-income (LTI) ratio for first-time buyers, through the launch of ‘Helping Hand’.
Later this month the lender will launch its Helping Hand mortgage, giving first-time buyers the option of borrowing up to 5.5 times their income when taking a 5 or 10-year fixed-rate, up to 90% loan-to-value (LTV).
In the UK there are 4.5 million households in the private rental sector, according to the Office for National Statistics (ONS), and homeownership among 25 to 34-year-olds has fallen from 55% to 35% in the two decades since 1997, according to the Institute for Fiscal Studies.
The Nationwide House Price Index has found that in the last 10 years, the average price of a first-time buyer property has increased by 41%, while the average income has risen by just 18%.
There will be £1bn of lending available via Helping Hand, and the society will apply a lower stress rate and higher maximum LTI where applicants opt for one of the society’s standard 5 or 10-year fixed-rate products.
This will enable an uplift in affordability of up to 20%, according to the building society, allowing more people to buy their first property up to a maximum 90% LTV.
First-time buyers using Helping Hand will have access to the standard product range, with consistent product rates, fees and features, and all first-time buyers benefit from £500 cashback on completion of their mortgage.
All applications will be subject to robust underwriting checks, including full assessment of credit score and additional credit commitments, to ensure the society continues to lend responsibly.
Henry Jordan, director of mortgages at Nationwide Building Society, said: “Nationwide was founded to help people into homes of their own and that remains the case as much today as it did 135 years ago.
“In the UK there are nearly five million private rented households, but many of these renters have dreams and aspirations of buying a home of their own.
“However, with household incomes rising at a slower rate than house prices, many first-time buyers are finding it increasingly hard to get onto the property ladder.
“Our new Helping Hand option supports borrowers in meeting the affordability requirements, making it easier for them to buy a home of their own.”