Nottingham Building Society has increased its maximum loan-to-income ratio (LTI), in response to the challenging economic climate for homeowners.
Borrowers looking to take out a mortgage with The Nottingham can now borrow a maximum of 5.5x against their household income, up from 4.5x.
The new LTI increase is applicable to households with a gross annual income of over £75,000.
This means households with a gross income of £75,000 can now borrow up to £412,500, a significant increase from the previous maximum of £337,500.
The Nottingham will keep in place its affordability tests – covering income, expenditure, and stressed interest rate – in order to ensure that applicants do not borrow more than they can afford to pay back, risking mortgage defaults.
This adjustment comes as the average asking price for a first time home reaches a new height of £224,963, yet incomes are not rising in line.
Alison Pallett, sales director of the Nottingham Building Society, said: “It’s imperative that we move with the ever-changing needs of our customers.
“We know that homebuyers are facing an extremely challenging economic environment, and we are committed to helping buyers navigate this period.”
She added: “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.”
