Nationwide makes major change to mortgage rules, meaning it can lend home owners more
Nationwide has made a significant change to its mortgage lending rules, which will increase the maximum amount it can hand out to borrowers.
Britain's biggest building society has adjusted its 'stress rates' - the hypothetical higher mortgage rates it tests borrowers' finances against when they apply for a mortgage or remortgage.
Lenders do this to check whether borrowers could still afford their monthly payments if their mortgage rate increased.
Banks have several different stress test rates depending on the mortgage term and other factors.
Commonly, lenders will check that a borrower could pay a mortgage rate two or three percentage points higher than their current one, so if they were applying for a rate of 4 per cent their finances might be tested against a 6 or 7 per cent rate.
Stress rates became common after the 2008 financial crisis, as one of several measures designed to prevent homeowners taking loans that were unaffordable.
However, some industry insiders take the view that stress rates at this level are too harsh, preventing people who could comfortably afford a mortgage from getting one.
How much more could YOU borrow?
Nationwide is reducing its stress rates by between 0.75 and 1.25 percentage points - including both its standard stress rate, and the rate applied to eligible first-time buyers and home movers fixing their deal for at least five years.
It claims that a home mover with a household income of £75,000, who was taking a five or 10-year fixed mortgage on a 25-year term, could previously have borrowed a maximum of £307,000 but could now borrow £336,800 - a £29,800 uplift.
A first-time buyer earning £55,000, taking a five or 10-year fix and using Nationwide's 'helping hand' mortgage, could see their maximum borrowing increase from £304,200 to £330,000 on a 27-year term.
This would be a £25,800 rise and would take the loan from 5.53 times their income to six times.
Someone remortgaging, but not taking any additional borrowing, could previously borrow £235,500 but may now get up to £278,100 - an increase of £42,600. This would be based on them having an income of £45,000 and a 40-year mortgage term.
This would mean their maximum borrowing would have gone from 5.23 times their salary, to 6.18 times.
However, banks are restricted in the amount of loans they can hand out which are more than 4.5 times what the borrower earns. Only 15 per cent of a lender's mortgages can exceed this limit - but Nationwide is calling on the Bank of England to increase it.
David Hollingworth, associate director at broker L&C Mortgages, said: 'Nationwide has a strong focus on first-time buyers and lower stress rates will hopefully help more reach toward the higher end of the maximum six times income, that it can offer through its 'helping hand' proposition.
'Those coming to the end of a deal could also benefit. Customers with concerns that they wouldn't meet a new lender's criteria, due to the higher rate environment, could find that affordability is now more generous than they thought.
'That should open up more choice from the open market rather than necessarily having to stick with an existing lender.'
It is not the first mortgage lender to reduce its stress rates in recent weeks.
Last month, Lloyds Banking Group adjusted its stress rates, claiming the typical customer could borrow £38,000 more. This applies to all banks in the group including Lloyds, Halifax and Bank of Scotland.
This was followed by HSBC and First Direct, which made changes to allow customers to borrow £39,000 more on average. Santander has also made similar adjustments to offer £35,000 more borrowing.
The banks are responding to guidance from watchdog the Financial Conduct Authority, which has said that, as interest rates fall, lenders should make sure they are not 'unduly restricting access to otherwise affordable mortgages'.
Henry Jordan, Nationwide's director of home, said: 'Affordability remains a key challenge and this change, along with our well-established and popular Helping Hand proposition, shows we're serious about tackling it.
'Whilst the FCA's clarification on affordability stress rates could support increased levels of home ownership, the Bank of England's flow limit dampens its potential impact.
'That's why Nationwide continues to call for a review of the 15 per cent limit, so that we, and other lenders, can help more people access the long-term benefits of home ownership.'
Best mortgage rates and how to find them
Mortgage rates have risen substantially over recent years, meaning that those remortgaging or buying a home face higher costs.
That makes it even more important to search out the best possible rate for you and get good mortgage advice.
Quick mortgage finder links with This is Money's partner L&C
> Mortgage rates calculator
> Find the right mortgage for you
To help our readers find the best mortgage, This is Money has partnered with the UK's leading fee-free broker L&C.
This is Money and L&C's mortgage calculator can let you compare deals to see which ones suit your home's value and level of deposit.
You can compare fixed rate lengths, from two-year fixes, to five-year fixes and ten-year fixes.
If you're ready to find your next mortgage, why not use This is Money and L&C's online Mortgage Finder. It will search 1,000's of deals from more than 90 different lenders to discover the best deal for you.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
The Sun
32 minutes ago
- The Sun
Primark opening new type of store in Britain for first time and shoppers will be thrilled
PRIMARK is set to open a brand new type of store just in time for summer. The bargain retailer is due to bring a new model of shop to the UK high street in the coming months. A new 11,900 sq ft, two floor shop is set to open in Manchester at the Trafford Palazzo. It will be the first ever dedicated Primark Home store to open in the UK. Primark have said the shop will bring together "the best of Primark's interiors offering under one roof." It will host an expanded range of homeware and lifestyle essentials for Manchester shoppers to browse and buy. The move comes following the firms first ever dedicated Primark Home store was opened in Belfast earlier this year. The new location in Manchester will also include a dedicated travel shop to help customers get holiday-ready. Paul Baldwin, Trading Director for Home at Primark said: 'Our mission is simple: to make it easy for everyone to create a home they love, without breaking the bank. "Customer reaction to our first Primark Home store in Belfast has been really positive, and we can't wait to bring this exciting new concept to Great Britain later this summer. "Homes have become more than just places to live, they're an extension of our personalities, so whether it's soft furnishings, statement tableware, or smart storage solutions you're after, our range has something for every style and budget.' An exact date for the stores opening hasn't been given by the retailer yet but it is expected to come this summer. 'One of each please,' shoppers race to Primark for adorable cosy homewear The new store will stock all manner of high-quality essentials like cotton bedding and towels, soft furnishings, small furniture and quirky ceramics. Trafford Palazzo is already home to one Primark location with the new store adding to the retailers offering on the site. Primark stores usually stock a full range of goods from clothes, to home to holiday essentials. For the first time ever Primark will now stock just homeware in a store. The fashion retailer currently employs over 80,000 people internationally. 2 Primark is known for its budget options and huge range, offering an extensive selection of goods at a low price. The retailer boasts over 460 stores globally with the new Primark Home in Manchester boosting this number further. According to the retailer: " Primark Home combines style, comfort and value to help shoppers make a house a home." Thrilled shoppers took to social media to show their excitement for the new stores launch. One user said: "You've got some great home stuff please make this department bigger and give us trolleys." Another commented: "I need one of everything, and two cushions." A third replied: "We need this store in Kalamazoo Michigan." Why Primark is great for looking expensive on a budget By Clemmie Feildsend, Fabulous Fashion Editor AS someone who's no stranger to grabbing a last-minute outfit from Primark for a night out, it's about time that celebrities started catching on too. For as long as I've been heading out, Primark has been my go-to for those 'I have nothing to wear' moments, rushing in at the last minute to find something perfect. And I'm definitely not alone - on any Friday or Saturday night, you'll find plenty of shoppers doing the same thing, right before closing time. But no matter what, Primark always delivers. Now, Rita Ora is leading the charge, showing that you can snag a designer-worthy look without spending a fortune at high-end stores. While Rita's not rushing in last minute for a red carpet outfit, she's proving you can achieve the same high-impact style for much less. Looking stunning in her tailored suit alongside her mum Vera, Rita fit right in among the other A-listers dripping in Prada, Dior, and Victoria Beckham - if anything, she looked even better than some of the guests at The Fashion Awards. With Myleene Klass and Roxy Horner already jumping on the Primark bandwagon, I'm sure more stars will be following suit soon enough.
Telegraph
an hour ago
- Telegraph
The treaty Gibraltar wants, for the future we all need
For over five years, Gibraltar has been at the centre of one of the most complex, technical, and geopolitically sensitive negotiations undertaken by the United Kingdom and the European Union since Brexit. The process has consumed me. It has occupied close to half of my time in elected office, taken over almost every waking hour of the last five years, and, in truth, deprived the people of Gibraltar of their Chief Minister in the way they are used to having him, that is, from fixing housing and parking complaints to defending their sovereignty in the international arena. For much longer than I would have wanted, I have been behind closed doors, in physical or virtual boardrooms, working through the details of a document that will shape the next generation of our people. It has been a relentless, exhausting endeavour. Throughout this time, the UK and Gibraltar teams have worked together seamlessly, 'hand in glove', without a flash of daylight between us. We have worked in close partnership with both Conservative and Labour prime ministers and foreign secretaries; from Dominic Raab, Liz Truss and James Cleverly to David Cameron and now David Lammy. What we have negotiated is not the product of fragmented agendas, but the position of a unified British family determined to find a solution worthy of our people. Without a treaty, Gibraltar could be staring down the barrel of a hard border, marked by endless queues, disrupted supply chains, and a deeply uncertain future for many of our businesses. Our hospitals and elderly care homes would face chronic understaffing, and the surrounding region would suffer the almost certain loss of employment for many of the 15,000 cross-border workers who depend on Gibraltar's economy to support their families. The services we deliver to our people would all come under strain. Our public finances would be pushed to the brink. The self-governing Gibraltar we have built would be diminished, replaced by something poorer, more isolated, more inward-looking, and ultimately less able to thrive as a proud, British European Territory. Instead, we now stand at the threshold of something remarkable, and not just for Gibraltar, but also for the United Kingdom, for Spain, and for Europe and our people. Something bold. Something forward looking and hopeful. Something that finally breaks free of the negative inertia that has defined too much of our recent past. Unlocking potential across borders This is politics at its most elevated. The service-led principle of working for our people's benefit and not the performative personal antagonism that too often infects public life. Real, hard graft that overcomes challenges to deliver progress. This is the kind of result our people demand when they voice distrust and decry the political 'establishment'. Our Spanish and EU counterparts, for their part, have brought to the table a seriousness of purpose that also reflects the gravity of the moment. They, too, have recognised that this treaty is not merely about fluidity of movement, but about unlocking human and economic potential across borders. Make no mistake: the treaty that is now within reach is not one that the Gibraltarians have been forced to accept. Our people voted for us to have a mandate to turn our New Year's Eve agreement of 2020 into a UK/EU agreement/treaty. So we say 'yes' to this agreement, but not because we don't know how to say 'no' when we have to. We did so, emphatically, in 2002, when we triggered a referendum to reject Jack Straw's proposal of joint sovereignty with Spain, and I am just as adamant today that this treaty will not in any way compromise British sovereignty over Gibraltar. That will be set out, black upon white, in the treaty when it is published. It is a legal undertaking given by both sides in clear and unequivocal terms. So to be clear: in this treaty we have not ceded any control of Gibraltar to any authority. Just like today, only Gibraltar will decide who enters Gibraltar – exactly as we agreed in 2020 when Dominic Raab was foreign secretary and Boris Johnson was prime minister. This treaty unleashes the potential to usher in a new era. One in which we move beyond the tired narratives of the past on constant sovereignty disputes, towards a future defined by hope, cooperation and shared prosperity. It will pave the way for better jobs, more investment and lasting stability for Gibraltar and the wider region. It can deliver more harmonious human relations and a better quality of life for all our people. When you read it, I ask that you to look up from the pages of this treaty and see that better reality as it peers back at us from the future. This will be the treaty Gibraltar wants. It will be a treaty the UK and the EU can be proud of. And it will be a treaty that will propel us all to the better future politicians are elected to deliver. When the time comes, back Gibraltar and its proudly British people by backing the Gibraltar treaty.
The Independent
an hour ago
- The Independent
Palace co-owner John Textor would sell shares for Europa League chance
Crystal Palace co-owner John Textor is willing to sell his shares in the club in order to ensure the Eagles can enter next season's Europa League, according to reports. The American, whose Eagle Football Group owns 43 per cent of Palace, has imperilled the club's chance of a first-ever European campaign owing to his involvement with Ligue 1 side Lyon, but is ready to offload his stake to his fellow co-owners in order to bring the saga to an end. UEFA does not allow clubs with the same ownership to compete in the same European competitions in a season. As well as his stake in Palace, the 59-year-old has a controlling stake in the French club, also via Eagle Football. However it is also reported that the European governing body does not consider Textor's influence at Selhurst Park to be decisive and is leaning towards allowing the club into the Europa League regardless. The PA news agency understands no formal decision is likely on Palace's fate until the end of June. Textor has previously spoken of his frustration at how little influence his stake entitles him to, over football matters. Victory for Oliver Glasner's side over Manchester City in last month's FA Cup final gave them their first major trophy and with it a first crack at Europe. However, Nottingham Forest have since written to UEFA to challenge Palace's Europa League spot and in the hope of taking their place. Forest's owner Evangelos Marinakis, who also owns Greek side Olympiacos, placed his shares in the club in a blind trust before the governing body's March 1 deadline, anticipating Nuno Espirito Santo's side's European qualification. At present Forest, who finished seventh in last season's Premier League, are set to enter the Conference League but would take Palace's Europa League place, should they be deemed ineligible.
