Nottingham Building Society is increasing its maximum loan to income ratio, in response to the more challenging economic environment faced by homeowners.
Borrowers will now be able to borrow a maximum of 5.5 times their household income, where as previously this was limited to a multiple of 4.5.
However this new loan to income increase increase will only apply to households with a gross annual income of over £75,000. At this level these households will now be able to borrow up to £412,500 — a significant increase on the previous maximum of £337,500.
The Nottingham stressed it will keep in place its currently affordability tests – covering income, expenditure, and stressed interest rate – in order to ensure applicants do not borrow more than they can afford to pay back, risking mortgage defaults.
This announcement comes as the average asking price for a first time home reaches a new high of £224,963.
Nottingham BS sales director Alison Pallett says: “We know that homebuyers are facing an extremely challenging economic environment, and we are committed to helping buyers navigate this period.
“We also recognise that rapid changes to the way we live and work mean that lenders with non-traditional circumstances can find it difficult to get the mortgage they want. We hope that alongside our affordability criteria, increasing our LTI ratio will help more homebuyers on their journey.”
