Nationwide key rule change 'could help 10,000 more people'

Nationwide is calling for mortgage affordability rules to be relaxed in a bid to help an extra 10,000 hopeful first-time buyers, as the building society revealed its record month of lending.

The lender said home buyers had been rushing to complete purchases ahead of tax relief being slashed from April. It reported a pre-tax profit of £2.3 billion for the year to the end of

March, 30% higher than the £1.8 billion it made the year before. A record year of lending resulted in total loan balances rising to £275.9 billion from £204.5 billion in 2023. Nationwide

said it had its busiest ever month of mortgage lending in March, and its strongest ever day on the last day of the month. This echoes similar comments made by Lloyds Banking Group, which

hailed its record day of lending in March. Stamp duty discounts becoming less generous from April onwards sparked a stampede of home buyers in the run-up to the deadline. Stamp duty – a tax

on property – applies in England and Northern Ireland. Muir Mathieson, Nationwide’s chief financial officer, said: “What’s been fascinating though is that, in April and May, the strength of

the mortgage market has continued. “We haven’t seen the cliff-edge, that drop-off in mortgage activity in April and May that we were expecting quite frankly. The mortgage market continues to

be really resilient and we’re intending to remain competitive within it.” Mr Mathieson said the group has been calling on the Bank of England to review its cap on high loan-to-income

lending. Like other lenders, it is limited to offering no more than 15% of new loans to customers borrowing at, or above, 4.5 times their income. Nationwide said it maxes out this cap every

year, because of the demand among first-time buyers for bigger loans relative to the amount they earn. Debbie Crosbie, Nationwide’s chief executive, said: “The reality is that if we didn’t

have the limit as low (as it is), then we could be lending to more first-time buyers. “For Nationwide alone we think it could be an extra 10,000 (per year), and it could be multiples of that

if the market limit was raised.” Mr Mathieson said that due to stricter affordability controls, the level of higher loan-to-value mortgages falling into arrears tends to be half that of its

other lending. Furthermore, Ms Crosbie said it is a “very competitive” mortgage market, adding: “Our margin that we’re earning is definitely lower this year than it has been in previous

years.” Nationwide, which bought rival bank Virgin Money last year, handed out a record £2.8 billion in value to members over the year including £1 billion in member rewards. The mutual –

which means it is owned by its customers, rather than shareholders – said more than four million of its members will receive its 2025 “fairer share” payment of £100 each.