NatWest has announced it is increasing its maximum Loan to Income (LTI) for joint applicants earning £150,000+, with access to up to 6.5x income at 75% loan-to-value (LTV) or less.
One broker said “lenders are trying to pull out all the stops to get Britain moving”, while another described the move as “music to my ears”. But some said the move “will not have much benefit beyond borrowers in the capital”.
This, NatWest says, is its 4th LTI enhancement this year, as part of a drive at the lender to maximise people’s borrowing potential. The new LTI applies to applications made from today.
Music to my ears
Sarah Fox-Clinch, Director at Bristol-based Fox Davidson, a broker, was positive about the change: “High street lenders are now competing hard in the large loan arena, and NatWest moving its joint LTI to 6.5x at 75% LTV is another positive step.
“For too long, high earning professionals have been pushed towards private banks and specialist lenders by default. The larger high street names have built strong large loan divisions of their own.
“High earners are good quality, low LTV borrowers, and lifting the income multiples is the simplest way for a lender to grow its book. Updates like this are music to my ears.”
Riz Malik, Independent Financial Adviser at Southend-on-Sea-based R3 Wealth, said “lenders are trying to pull out all the stops to get Britain moving, and these further enhancements demonstrate how far they are prepared to go”.
But he warned stamp duty remains a critical issue: “Is it enough to get Britain moving? Not with the stamp duty noose around the neck of the UK property market. That decision needs to come from the government, and their attention seems to be diverted elsewhere at present.”
Loan-to-value cap
Hannah Vandervennin, Director at The Mortgage Consultancy, said a possible tension is the LTV: “The headline is the income multiple, but the real constraint is the 75% LTV cap, which still requires a 25% deposit.
“Pushing income multiples upward without loosening the LTV ceiling is moving one lever while the other stays bolted down.
“A higher LTV cap alongside the new income multiple would have unlocked considerably more transactions. As it stands, this is a competitive move for a narrow cohort, not a market mover.”
Though he said it will be a solution for some borrowers, Gaurav Shukla, CEO at Marlow-based Home Me Mortgages, was also sceptical that the move will truly spark the property market.
He said: “This will help a segment of the market, particularly higher earning professionals struggling with affordability despite strong incomes.
“For people on £150k+ household income, moving from 5x to 6.5x income can be the difference between heavily compromising or actually buying in areas where prices have outpaced wages.
“That said, this alone won’t “get Britain moving”. Affordability is still driven by rates, confidence and whether monthly payments feel comfortable, not just maximum borrowing power.”
Seismic impact
Stephen Perkins, Managing Director at Norwich-based Yellow Brick Mortgages, believes the impact will be limited beyond the capital.
He said: “NatWest’s further increase to maximum borrowing potential will certainly help some borrowers, but with the 25% deposit requirement and 150k minimum income to obtain it, this will not have any seismic impact beyond high earners in London.
“However, it would not be surprising if these criteria were reduced or eased over the coming months, or by competing lenders looking to do similar.
“The key for the borrowers will be to consider that just because the bank will lend you the money, are you comfortable you can afford the repayments over the long term.”
Ranald Mitchell, Director at Norwich-based bad credit mortgage specialists Charwin Mortgages, said “NatWest’s move is exactly the kind of modern lending criteria the market needs”.
He continued: “Britain’s housing market has changed, incomes have changed and property prices have changed, so lenders have to evolve, too. This is not reckless lending.
“Mortgage underwriting is more forensic than ever, with detailed checks on income, commitments, credit conduct and real affordability. Where the case stacks up, borrowers should not be held back by outdated income caps. This is a welcome step and should help get parts of Britain moving again.”
