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Mortgage lenders’ attempts to lure in first-time buyers have stepped up with the UK’s biggest building society allowing some to borrow more.<\/p>\n
The Nationwide said that from Tuesday, new borrowers could request a mortgage up to six times their income with a 5% deposit.<\/p>\n
But it would only be available for those taking out a five or 10-year fixed-rate deal.<\/p>\n
With rates expected to fall, some may only want a loan with interest fixed for a shorter term. The uptake is expected to be concentrated in London and south east England.<\/p>\n<\/div>\n
Applicants will still have to meet relatively strict affordability criteria, which is assessed individually. <\/p>\n
Lenders also face their own regulated controls on lending to riskier borrowers, brought in after the financial crisis of nearly 20 years ago which saw certain banks – which many accused of unnecessarily risky lending – being bailed out.<\/p>\n<\/div>\n
Competition between mortgage providers has intensified in recent months.<\/p>\n
Brokers say that lenders have been offering the best deals to new, house-purchasing customers, rather than those who are remortgaging.<\/p>\n
With relatively few buyers, providers are trying to get a piece of a small pie.<\/p>\n
First-time buyers are seen as a key battleground, and the Nationwide has been offering among the largest so-called income multiple for home loans.<\/p>\n<\/div>\n
While the standard level of borrowing for first-time buyers is a loan of up to 4.5 times’ income, the Nationwide has allowed some to borrow 5.5 times – a move followed by some other major providers.<\/p>\n
Now, it will step that level up to six times – but only among first-time buyers with an individual income of at least \u00a330,000 a year, or a couple earning at least \u00a350,000 a year.<\/p>\n
It is also planning to reduce some mortgage interest rates slightly, and increase the maximum total loan available.<\/p>\n
“It is a welcome move for the right borrowers, but it is not going to work for everyone,” said David Hollingworth, from broker L&C.<\/p>\n
Brokers said lenders were generally wary when lending at high income multiples, with such deals usually only available to high earners.<\/p>\n
Some smaller lenders offered six times’ salary although they normally charged higher rates of interest, they said.<\/p>\n
Broker Michelle Lawson, of Lawson Financial, said lenders were diversifying their offer to attract more business. <\/p>\n