The high street bank has relaxed its affordability calculations for all mortgage customers, in line with other major lenders. 

It says the change to its stress rates means “a typical family will be able to borrow up to £33,000 more, while still applying long-term stress rates to guard against future interest rate rises”. 

The business also debuts two- and five-year 60% loan to value mortgages at 3.88%.

The lender also debuts a Family-Backed mortgage, which allows eligible first-time buyers to boost the amount they can borrow by combining their income and the income of a family member or friend, while still buying the property in their own name. 

The lender says, for example, a FTB earning a £28,000 salary with a 10% deposit can borrow up to £124,450 through NatWest’s existing mortgage products.  

This FTB would have a budget ceiling of approximately £138,000 when looking to buy their first home. 

But the firm adds its Family-Backed mortgage allows FTBs to add a family member or friend to the mortgage.  

For example, where the family member or friend earns £45,000, this arrangement would instantly increase the FTB’s maximum borrowing potential to £246,000, giving them a property budget of approximately £273,000. 

NatWest managing director of homebuying Barry Connolly says: “Today’s launch of the Family-Backed mortgage boosts the borrowing power of prospective homeowners by enabling them to combine incomes with a family member or friend, while retaining independence to own a home in their own name. 

“In addition, we also announce that we have revised our affordability rates for mortgage customers, boosting the borrowing potential of hundreds of thousands of potential homeowners, while continuing to ensure that they can afford their mortgage over the long term.” 

Earlier this month, Lloyds Banking Group, which owns Halifax, eased affordability calculations among its lenders among homebuyers and remortgagers that it said would allow typical households to borrow an extra £38,000. 

In March, Santander said it would also lower its mortgage stress testing, meaning that some customers could borrow between £10,000 to £35,000 more. 

The moves from these lenders come after the Financial Conduct Authority said last month that lenders have been “too cautious” in granting FTB home loans under current rules.

FCA chief executive Nikhil Rathi told the Treasury Committee in March that under existing regulatory rules lenders have a degree of “flexibility” over the stress tests they apply to homebuyers coming to the market for the first time, which they have not exercised.