The Nottingham Building Society is raising the maximum loan-to-income ratio as a result of the more difficult economic climate that homeowners are currently experiencing.
Prior to this change, borrowers were only permitted to borrow up to a multiple of 4.5 times their household income.
However, only households with a total yearly income of over £75,000 will be affected by this new loan-to-income rise. These households can now borrow up to £412,500 at this level, a significant increase from the previous cap of £337,500.
The Nottingham underlined that in order to prevent applicants from borrowing more than they can afford to repay and running the danger of mortgage defaults, it will maintain its present affordability requirements, which involve income, expenditures, and stressed interest rates.
This statement coincides with a new high for the average asking price for a first-time home of £224,963.
“We know that homebuyers are dealing with an extremely difficult economic environment, and we are committed to helping buyers navigate this period,” says Nottingham BS sales director Alison Pallett.
We also acknowledge that the way we live and work is changing quickly, making it challenging for lenders in non-traditional situations to obtain the mortgage they need. Along with our affordability standards, we anticipate that raising our LTI ratio will aid more prospective homebuyers in their endeavours.