Move aims to expand access to home loans for lower earners
Leeds Building Society has cut the minimum household income required to secure a mortgage at more than 4.5 times annual earnings, following approval from the Bank of England to exceed the 15% cap on such lending. The threshold for both single and joint applicants has dropped from £40,000 to £30,000 per year.
The revised criteria at Leeds Building Society apply across all the mutual’s residential lending, including its 5% deposit mortgages and the Income Plus range, which targets first-time buyers.
Under the updated policy, applicants earning £30,000 annually may now be eligible to borrow up to £165,000 through an Income Plus mortgage, compared to £134,700 previously, subject to standard affordability checks. For those using a 95% loan-to-value mortgage, the maximum property value accessible on a £30,000 income has increased from £141,000 to £173,000.
The lender’s move comes as part of a broader shift in the market, with several other providers also revising their lending policies in response to recent changes introduced by the Prudential Regulation Authority (PRA). The regulator’s updated rules are designed to facilitate more high loan-to-income lending across the sector. The decision also follows Chancellor Rachel Reeves’ Mansion House speech on July 15, which set out plans to lower financial barriers and support 36,000 first-time buyers in purchasing homes over the coming year.
Leeds Building Society has also recently lowered its stress rate to further support borrowing. Additional initiatives include Reach Mortgages for applicants with lower credit scores, a partnership with Experian Boost, and the Home Deposit Saver account.
“We welcomed the decision to consider allowing more high loan-to-income on a lender-by-lender basis and are very pleased to have gained the Bank of England’s permission,” said Matt Bartle, director of mortgages and savings at Leeds Building Society.
“Lowering our minimum income requirements brings the dream of homeownership a step closer for more borrowers, including many earning below national average earnings. We understand the importance of being a prudent and responsible lender. We carry out detailed affordability checks to make sure borrowers can realistically afford repayments and not over-extend themselves financially.”
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