NatWest will now lend high earners up to 6.5 times their income in its latest affordability boost.
The lender has told brokers today by email that it has increased its maximum loan-to-income threshold for joint applications earning over £150,000.
It will restrict the upper loan-to-value limit to 75% for those borrowing at the maximum LTI of 6.5x.
Trinity Financial product and communications director Aaron Strutt says: “This is an unexpected move from NatWest that makes their proposition more appealing to higher earners looking for larger mortgage loans especially as the bank often has best buy mortgage rates.
“NatWest is clearly targeting the higher earners keen to secure bigger mortgages and they can offer larger income multiples now that the lenders are under less pressure from the financial regulators to hold off issuing more generous mortgages.
“NatWest has always been a relatively generous lender but it has gone one step further to being one of the top income multiple providers to higher income earners.
“This policy change means they are more generous than virtually all of the other banks and building societies.
“That said, HSBC made a similar change last year but borrowers needed to earn over £100,000 to access the increased 6.5 times salary multiple.
“We know the lenders are keen for business but this income stretch mortgage is large and borrowers will really need to think carefully before they take on such a big debt – even if they earn £150,000.
“This change will get NatWest more business especially as many applicants only need slightly more generous loan sizes to buy the properties they want.
“Affordability is clearly a huge issue in the mortgage and property markets and NatWest is trying to address this although at the moment mainly for higher earners.
“Many potential borrowers are still struggling to buy the properties they want.
“Potential buyers will be reading this policy change and wondering why applicants need to earn so much to get the higher income multiples.
“But in fact they don’t have to, because there is a selection of lenders offering between five- and seven-times salary to many first-time buyers.
“There are also more low deposit mortgages.”
Strutt says that Teachers’ Building Society and April Mortgages will go up to seven times salary for eligible borrowers; HSBC up to 6.5x; Nationwide and Barclays up to 6x; while Halifax, TSB and Santander will go up to 5.5x.
