The new deal from Nationwide will allow a couple earning £50,000 between them to borrow £300,000, which is some £75,000 more than previously
In a first for a major lender, Nationwide, Britain’s largest building society, is set to offer first-time buyers loans of up to six times their salary, with a maximum amount of £750,000. The new deals will enable a couple earning £50,000 between them to borrow £300,000, which is £75,000 more than previously possible.
However, couples with a higher joint income and a 10 per cent deposit will see the maximum amount they can borrow increase from the current limit of £500,000 to £750,000. Nationwide’s move suggests it is eager to secure a larger share of the first-time buyer market, potentially prompting other lenders to follow suit and possibly introduce even larger salary-related loans.
However, past attempts by banks and building societies to offer large loans have led to issues, such as contributing to a housing price bubble before the 2008 financial crash, which resulted in buyers being left in negative equity when it burst. Nationwide, offering these deals under the Helping Hand mortgage brand, announced that they will be available to new borrowers from tomorrow.
The building society stated that these mortgages are designed to support the government’s housing ambitions and demonstrate the benefits of being part of a modern mutual run for its members’ benefit. According to data from UK Finance, approximately 5 per cent of all house purchase loans were over £500,000 in the six months leading up to June 2024, with this figure rising to 22 per cent in London.
Debbie Crosbie, Nationwide’s Chief Executive, stated: “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.”
According to Nationwide’s House Price Index3, the average first-time buyer property price in the UK is £226,794, however, this varies widely across the country. The Helping Hand scheme has been particularly beneficial in the Outer South East, where the average first-time buyer house price stands at £262,504, and where uptake of Helping Hand has been highest.
Nationwide addressed concerns that young people may take on loans they cannot afford to repay, stating each application ” will continue to be subject to robust underwriting checks, including full assessment of credit score and additional credit commitments”.
David Hollingworth, Associate Director, Communications at L&C Mortgages, commented: “Helping Hand has been a front runner in expanding the range of options open to first-time buyers who continue to struggle with affordability.”
“Building an adequate deposit is hard enough especially when the available mortgage borrowing is capped, and prices remain high. 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 said: “This package of measures is an encouraging development in the first-time buyer market, as it directly addresses a major barrier that many face in being able to borrow enough to take that important first step on the housing ladder.”
“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. We welcome this move and hope this is the start of a new and accelerated wave of support for first-time buyers.”
“The timing of this announcement will be welcomed by many first-time buyers, as we’re seeing a much more active housing market than at this time last year, with buyer demand increasing into the traditionally busy Autumn season.”
