Nationwide Building Society has increased its support for first-time buyers by extending its ‘Helping Hand’ mortgage to those with a 5% deposit.
The Society’s ‘Helping Hand’ gives first-time buyers the option of borrowing more when taking one of the Society’s five or 10-year fixed rate mortgages.
However, from Friday 11 February, it will now be available on those mortgages up to 95% loan-to-value (LTV), up from the original 90%.
It means a first-time buyer couple with a joint income of £50,000 could borrow up to £275,000 rather than the £225,000 they could borrow with a conventional 95% mortgage, assuming no other costs impacting affordability.
The lending boost comes at a time when the house price to earnings ratio continues to rise.
Over the last 10 years, this ratio for a first-time buyer has gone from 4.4 (Q4 2011) to 5.6 (Q4 2021), while the average first-time buyer house price has increased by 54% – from £139,472 (Q4 2011) to £214,638 (Q4 2021).
Nationwide will continue to apply a lower stress rate and higher maximum loan-to-income ratio where applicants opt for one of the Society’s standard 5 or 10-year fixed rate products. This will enable an uplift in affordability of up to 20%, allowing more people to buy their first property up to a maximum 95% LTV.
First-time buyers using Helping Hand for enhanced affordability will have access to the standard product range, with consistent product rates, fees and features. All first-time buyers benefit from £500 cashback on completion of their mortgage.
To ensure the Society continues to lend responsibly, all Helping Hand applications will be subject to robust underwriting checks, including full assessment of credit score and additional credit commitments.
Henry Jordan, director of mortgages at Nationwide Building Society, said: “Alongside saving for a deposit, the ability to borrow enough on their mortgage continues to be a significant hurdle to homeownership. As one of the leading lenders to first-time buyers, we have played our part in tackling that key challenge through Helping Hand during a time when house prices have continued to rise.
“As a mutual, we were founded to support people into their first home and that remains at the heart of what we do. We know that raising even a 10% deposit can be tough for some, which is why we are extending Helping Hand to our 95% loan-to-value range and, in doing so, helping more people get a home of their own.”
David Hollingworth at L&C Mortgages added: “First-time buyers typically face two major issues when attempting to take their first step on the ladder. High house prices mean there’s a need not only to build a substantial deposit, but also to be able to meet the affordability requirements for a mortgage.
“These challenges often combine, so extending the more flexible Helping Hand criteria to those with smaller deposits will provide a useful and targeted solution for a broader range of first-time buyers.”
