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YBS improves new-build and affordability criteria

Samantha Partington
Written By:
Posted:
September 5, 2024
Updated:
September 5, 2024

Yorkshire Building Society (YBS) has upped its new-build loan to value (LTV) and increased borrowing criteria for households earning at least £50,000 per year.

YBS’ decision to increase its LTV for new-build properties from 85% to 90% follows a spate of LTV improvements from high street mortgage lenders.

At the same time, the bank has improved its affordability criteria. Households with a minimum annual income of £50,000 can borrow up to five times their earnings to buy a home, which includes new builds. Previously, only households with a minimum income of £60,000 would be offered the enhanced income multiple.

Research from YBS highlighted that 58% of non-homeowners aged 35-54 and 21% of those aged 18-34 could be giving up on buying their own home, leaving lifetime renters with a potential wealth gap of £2.6m.

 

Helping hand to buy a home

Ben Merritt, director of mortgages for YBS, said: “Increasing lending on new-build properties is a positive step [that] will help borrowers with a smaller deposit, including first-time buyers, who have their hearts set on a brand-new home.

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“The affordability changes are designed to build on the work we started with the launch of our £5k Deposit Mortgage in March, and the latest example of our commitment to supporting borrowers in finding a place to call home. They follow our research and analysis [that] recognised the challenges faced by so many trying to get onto, or move up, the property ladder.”

 

Renewed lending appetite

Mortgage lenders have increased their appetite for new-build lending. Santander upped its LTV for houses and flats to 95% in February, and in recent weeks, lenders such as HSBC, Nationwide, and NatWest have all made changes to their LTVs.

Brokers say price resilience in the new-build market along with a need to chase market share and signs of growing demand this year have encouraged lenders to be bolder with their criteria in this area of the market.

A Mortgage Solutions poll has revealed that almost a third of brokers say they are seeing more new-build incentives from housebuilders.