Nationwide Offers 6x Earnings for First-Time HomeBuyers

Explore how Nationwide enables first-time homebuyers to borrow six times their earnings, unlocking new opportunities for homeownership.

In a significant development within the UK housing market, Nationwide Building Society, the largest building society in Britain, has announced a groundbreaking policy that permits first-time homebuyers to borrow up to six times their annual earnings. This initiative has been characterized as a “gamechanger,” intensifying the ongoing mortgage price war among lenders.

Just weeks prior, Halifax and Lloyds had unveiled their own policies, allowing new buyers to secure loans of up to 5.5 times their household income. In a bold move, Nationwide has now set a new precedent for major high street lenders by increasing this threshold to six times income. Furthermore, the society is not only reducing its mortgage rates but also expanding its maximum loan sizes. Prospective homeowners seeking a mortgage for more than 90% of a property's value can now borrow up to £750,000, a notable increase from the previous cap of £500,000, and surpassing the £570,000 limit imposed by many competitors.

These strategic adjustments come in the wake of a competitive mortgage price war, spurred by the Bank of England's interest rate cut on August 1 and the anticipation of further reductions. In July, fixed-rate deals dipped below 4% for the first time since February, and Nationwide’s recent changes include a series of fresh rate cuts. Notably, it will be the first major lender in a considerable time to offer a fixed deal priced below 5% for first-time homebuyers who can only manage a 5% deposit.

Perhaps the most striking aspect of Nationwide's announcement is its willingness to increase the maximum sums available to borrowers. Historically, the typical maximum borrowing limit was set at 4.5 times annual income; however, a growing number of lenders have recently begun to offer higher multiples. On August 29, Lloyds Banking Group revealed that its Lloyds and Halifax brands would now permit new buyers to borrow up to 5.5 times their household income, an increase from the previous limit of 4.49 times. While several leading lenders have adopted this higher threshold, few have ventured to extend it to six times income or beyond. Notably, Perenna is one such lender, and in 2021, Habito announced it would allow certain homebuyers to borrow up to seven times their income.

Nationwide had previously raised its maximum income multiples in April 2021, increasing the figure to 5.5 times earnings for select first-time homebuyers under its Helping Hand initiative. The recent policy change allows new buyers to borrow up to six times their income when opting for a five- or ten-year fixed rate mortgage for up to 95% of the property's value. This adjustment means that a first-time-buying couple with a combined income of £50,000 can now secure a loan of up to £300,000, a substantial increase from the previous limits of £225,000 under Nationwide’s standard lending terms and £275,000 under the Helping Hand scheme.

Nationwide's latest move has been hailed as “a gamechanger for first-time homebuyers,” promising to deliver a significant boost in addressing the pressing affordability challenges that have hindered many from achieving homeownership. These enhancements could potentially increase borrowing availability by as much as 33%. Since its inception three years ago, the Helping Hand initiative has successfully assisted approximately 40,000 individuals in ascending the property ladder, underscoring the impact of such progressive lending policies in a challenging economic landscape.