In her Mansion House speech later today, Reeves will announce the Leeds Reforms to cut red tape in financial services.
She will say that the availability of mortgages at over 4.5 times a buyer’s income will create up to 36,000 more mortgages for first-time buyers in the first year of the changes.
Last week, regulators announced that lenders would be allowed to provide more of these high loan-to-income (LTI) mortgages and not be restricted to this accounting for 15% of their residential lending each year.
Nationwide has already reacted by lowering the minimum income needed for its Helping Hand mortgage, which lends at six times income to first-time buyers. This is expected to help 10,000 more first-time buyers each year.
Yorkshire Building Society has also reduced the minimum income threshold for its Boost LTI product, offered through Accord Mortgages, and extended it to first-time buyers borrowing at 95% loan to value (LTV).
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These changes will be part of other reforms set to boost homeownership, including a permanent mortgage guarantee scheme and potentially allowing renters to use rental payment history to show they can afford a mortgage.
Financial services at the ‘heart’ of the government’s growth plan
Reeves is expected to say: “This is the foundation of an economy, and a country, that is more active and more confident.
“Where people and businesses look to the future and talk about hope, about opportunity. Assured of their own capability, and of the ability of our country to boldly face the challenges that lie ahead.
“And certain of the prize if they succeed. Of higher wages and higher living standards. The renewal of Britain in every home and every high street. To put it simply: a Britain that is better off.”
She will add: “I welcome the recent changes the Financial Policy Committee has announced to the loan-to-income limit on mortgage lending, which the Prudential Regulation Authority and Financial Conduct Authority are implementing immediately.
“With an instant impact for consumers, such as Nationwide offering its ‘Helping Hand’ mortgage to more first-time buyers – supporting an additional 10,000 each year.”
Reeves will continue: “Today, I have placed financial services at the heart of the government’s growth mission.
“Recognising that Britain cannot succeed and meet its growth ambitions without a financial services sector that is fighting fit and thriving.
“And I have been clear on the benefits that that will drive. With a ripple effect that will drive investment in all sectors of our economy and put pounds in the pockets of working people.”
