Change makes it easier for borrowers to move lender to secure better mortgage deal
Nationwide Building Society has increased the maximum loan-to-income it will offer on like-for-like remortgages to support borrowers who are either looking to remortgage to get a better rate, or those who are on a variable rate deal and want to fix their mortgage payments.
For all remortgage applications made from Thursday, May 12, that don’t require any additional borrowing, the Society is increasing the maximum loan-to-income it will accept from 4.49x to 6.5x income up to the existing 90% LTV limit.
By increasing the maximum loan-to-income, it is also likely to benefit mortgage prisoners who, despite a clean payment history, are now struggling to meet current affordability criteria in the market.
Applications will continue to be subject to Nationwide’s affordability assessment to ensure the Society continues to lend responsibly. This will be with the lower stress rate for like-for-like remortgages, following the reduction made in January 2020 from the previous 3% above SMR.
Henry Jordan, director of mortgages at Nationwide Building Society, stressed that given the current squeeze on household finances, the ability to get the best possible mortgage deal has never been as important.
“The remortgage market continues to remain strong as people look to try and counter the rising cost-of-living by securing a better rate on their mortgage or fixing their mortgage payments. By increasing the maximum loan-to-income, we are giving people who don’t need any additional borrowing more opportunity to change lender and save money, and potentially helping those mortgage prisoners who have been unable to remortgage to a better deal until now,” Jordan said.
“As a responsible lender, we always ensure that borrowers can afford their mortgage payments both now and, in the future, which is why this increase is solely available on like-for-like remortgages where there is a clean, proven payment history,” he continued.
David Hollingworth, associate director at L&C Mortgages, said the move should help give borrowers confidence that they can shop around, despite facing a backdrop of higher interest rates and rising costs of living.
“Those borrowing on a like-for-like basis will have a clear track record of meeting their payments and will feel that they should be able to take advantage of better deals by switching lender. It’s therefore good to see lenders thinking about how they can provide more flexible solutions to the right target groups.”