Skipton Building Society will lower the minimum income threshold for borrowers looking for high loan-to-income mortgages to £40,000 from £50,000.  

The mutual will offer an LTI of up to 5.5 times at up to 90% loan to value and 5 times LTI for loans over 90% LTV for customers with incomes of £40,000 or more, across its product range, subject to affordability, from next Monday (28 July). 

Its new criteria changes mean that customers with a total application income of £41,000 and a 10% deposit will be able to borrow up to £225,500 — that’s over £41,000 more, a 22% increase on what they could have previously borrowed.    

Under its old lending rules, borrowers on a £41,000 income and a 10% deposit could have borrowed up to £184,090. 

Also, Skipton will lift the maximum LTI ratio on its 100% Track Record no-deposit mortgage from 4.75 to 5 times income.  

This will allow borrowers with a household income of £60,000 applying for this loan to borrow up to £300,000 – a 5% increase, or £15,000. 

The move comes after the Financial Policy Committee earlier this month confirmed that large and smaller lenders would be able to underwrite more loans at over 4.5 times a buyer’s income.  

The Financial Policy Committee said that large lenders will be able to lend over 15% of overall new home loans at high loan-to-income levels, as long as the aggregate flow of this high loan-to-income lending remains under 15% among large banks overall.  

Previously, no large bank could top the 15% rule. This left a situation where some banks threatened to breach this level, while others were comfortably under this level. 

The official announcement of this change came through the Bank of England’s Prudential Regulation Authority. 

Skipton Building Society chief executive of home financing Charlotte Harrison says: “We’ve campaigned for change to the LTI rules to better support first-time buyers, so it’s really positive to see the PRA respond, and we’re proud to be taking immediate action following that shift.   

“The PRA has estimated that LTI changes could support an additional 36,000 FTBs into homeownership each year. We look forward to working closely with regulators and industry partners to build on this progress.” 

Nationwide said last week this move will allow it to write around 10,000 more FTB loans over the coming year, while Lloyds Banking Group announced it would set aside an extra £4bn for high loan-to-income lending.