This follows a reminder from the Financial Conduct Authority (FCA) that lenders already had the flexibility to adjust affordability stress tests, as the regulator consults on simplifying mortgage rules.
Nationwide said that due to these changes to its standard stress rate and the stress rate applied to first-time buyers and homemovers fixing for at least five years, borrowers could access an average of £28,000 more than previously.
The change will benefit all borrowers, including first-time buyers, who can make use of its Helping Hand range, which allows for borrowing up to six times their income, up to 95% loan to value (LTV).
Nationwide said the biggest difference would be felt among those remortgaging with no additional borrowing, as they fall outside the loan-to-income (LTI) flow limit and are unlikely to be capped at four-and-a-half times income.
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What has changed?
| First-time buyer with Helping Hand | Homemover | Remortgage |
| Product: five– or 10-year fixed rate
Income: £55,000 Term: 27 years Max loan before: £304,200 Max loan after: £330,000 Uplift: £25,800 LTI before: 5.53x LTI after: 6x |
Product: five– or 10-year fixed rate
Income: £75,000 Term: 25 years Max loan before: £307,000 Max loan after: £336,800 Uplift: £29,800 LTI before: 4.09x LTI after: 4.49x |
Product: All
Income: £45,000 Term: 40 years Max loan before: £235,500 Max loan after: £278,100 Uplift: £42,600 LTI before: 5.23x LTI after: 6.18x |
Nationwide said even though these changes had been made, it would continue to lend responsibly using its criteria and underwriting checks.
It also said it already helped first-time buyers borrow more through its Helping Hand product, but noted it was still subject to the Bank of England’s Financial Policy Committee LTI flow limit cap, restricting the amount of lending at or above four-and-a-half times income to no more than 15% of its total residential lending each year.
Nationwide added that it would continue to manage this lending relative to the rules, but called for the Bank of England to review this.
Regulators are currently consulting on raising the cap, so it only applies to lenders who provide more than £150m in residential mortgage loans each year, up from £100m.
Henry Jordan, Nationwide’s director of home, said: “Affordability remains a key challenge and this change, along with our well-established and popular Helping Hand proposition, shows we’re serious about tackling it.
“Whilst the FCA’s clarification on affordability stress rates could support increased levels of homeownership, the Bank of England’s flow limit dampens its potential impact. That’s why Nationwide continues to call for a review of the 15% limit, so that we, and other lenders, can help more people access the long-term benefits of homeownership.”
More help for borrowers, but not without limits
Nick Mendes, mortgage technical manager at John Charcol, said the change was a “welcome move” and could make a “meaningful difference” in the market.
He added: “The change follows recent FCA guidance allowing lenders to assess affordability using product rates rather than higher revert rates. This gives a more realistic view of a borrower’s ability to repay, particularly for those opting for longer-term fixed deals. We’ve also seen similar shifts from other lenders in recent weeks.
“While this is undoubtedly a positive and practical step, the full benefit won’t be felt until wider lending rules are addressed. Like other major lenders, Nationwide is still subject to the Bank of England’s loan-to-income cap, which limits higher-LTI lending to just 15% of new loans. That restriction makes it harder to offer this support more widely.
“Even so, the move reinforces Nationwide’s leadership on affordability and reflects a clear commitment to helping more people take their next step on the property ladder.”
David Hollingworth, associate director at L&C Mortgages, added: “We’ve seen lenders respond quickly to the FCA clarification around lender flexibility in how they set their stress rates. Nationwide is the latest major lender to alter its approach, again with the aim of giving more borrowers the chance of accessing a larger borrowing.
“Affordability remains one of the key areas preventing customers turning their homebuying aspiration into a reality. Stress rates help build in some headroom to homeowners’ monthly budget, allowing them to better deal with rising rates. Taking a more measured approach should give more flexibility to the right customers but still providing balance against over-exposing borrowers in future.
“Nationwide has a strong focus on first-time buyers and lower stress rates will hopefully help more reach toward the higher end of the maximum 6x income that it can offer through its Helping Hand proposition.
“Those coming to the end of a deal could also benefit. Customers with concerns that they wouldn’t meet a new lender’s criteria, due to the higher rate environment, could find that affordability is now more generous than they thought. That should open up more choice from the open market rather than necessarily having to stick with an existing lender.”
