Nationwide is increasing the maximum loan term at 90 per cent loan-to-value lending back to 40 years.

The move from the UK’s biggest building society, which comes into force tomorrow (Tuesday 21 January), comes as lenders bid to normalise their mortgage terms amid the pandemic.

In July 2020, the society became the first major lender to offer 90 per cent LTV mortgages without any restriction on volume.

However, it did initially apply some enhanced criteria, such as temporarily restricting the maximum loan term to 25 years.

Lending at all other tiers had remained at a maximum term of 40 years throughout the pandemic.

Around 70 per cent of first-time buyers last year took out a mortgage with an initial term of over 25 years, up from 45 per cent in 2010, according to Nationwide’s HPI Affordability report.

The lender says it continues to expand its higher LTV lending, having moved to offering 90 per cent LTV loans to homebuyers and existing members moving house at the end of 2020 as well as first-time buyers.

Nationwide director of mortgages Henry Jordan says: “As a responsible lender we initially made a cautious re-entry back into the higher LTV market. However, as we become more comfortable lending in the current market, we are now in a position to revert to offering 90 per cent LTV mortgages available with a maximum term of 40 years.”

He adds: “We know that many borrowers, particularly first-time buyers, will opt for a longer term mortgage in order to help make their monthly mortgage repayments more manageable.”

Nationwide says it continues to receive a high level of applications as borrowers look to take advantage of the stamp duty holiday, due to end at the end of March.

The firm adds it has “added additional resource to its teams to help process as many cases as possible by the deadline”.

At the start of December, the lender sped up its service by removing some processes brought in to help deal with the significant number of mortgage applications submitted to the society last year. Standard cases, including those at 90 per cent LTV, now go from application to offer in an average of 15 days – half the time it took at the start of December.

Jordan says: “The changes we made at the end of last year continue to have a positive impact on our service levels with the time from application to offer halving in recent weeks. However, with the stamp duty holiday ending in March, we are likely to enter a peak period.”

He adds: “We are grateful to all brokers who continue to submit new cases while, at the same time, managing their clients’ expectations on the likelihood of their application completing before the deadline.”

Last week, the Intermediary Mortgage Lenders Association called on the government for the extension, or phased withdrawal, of the stamp duty holiday, which saw mortgage applications spike in the second half of 2020.