Nationwide Building Society shake up the earning ratios!
As of Monday 26th April, first-time buyers are allowed to stretch their salaries five and half times in order to reach the mortgage amount they need to buy a home with a ten per cent deposit using Nationwide! This is a massive show of faith and will have a huge impact for many local first time buyers.
A lower stress rate is combined with the 5.5 times income multiple to increase the size of the loan offered by 20 per cent. The building society would not disclose the stress rate but said it was a new rate that applied specifically to this range.
The change means a first-time buyer couple with a joint income of £50,000 can now borrow up to £275,000 with Helping Hand, rather than the £225,000 they could borrow previously, assuming a ten per cent deposit and no other costs impacting affordability.
Nationwide said borrowers will be subject to “robust underwriting checks”, which includes scrutiny of the amount of unsecured debt on the credit report.
If necessary a lower income multiple will offered to help secure the right mortgage product. Self-employed borrowers are currently excluded from the Helping Hand deals and while the range has launched to first-time buyers only Nationwide may look to extend it to home movers in the future.To manage volumes, a minimum single annual income of £31,000 or joint earnings of £50,000 apply, which are inline with average national salaries for the typical first-time buyer age group. The minimum salaries will be kept under review.
Nationwide has set aside a whopping £1bn of lending to fund the mortgage range.
Positive news like this will help to keep demand in the property market high. The question remains though; will the shortage of properties for sale create a price increase bubble?
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