Another lender raises LTI limits following recent rate increase
NatWest has increased its mortgage rates by up to 27 basis points, making it the latest major lender to announce a rise amid renewed pressure on funding costs.
The bank's lowest standard residential purchase rate now stands at 4.3% on a two-year fixed product at 60% loan to value (LTV), with a £995 fee. Its lowest residential remortgage rate is 4.43%, available on a two-year green remortgage at 60% LTV, also with a £995 fee.
First-time buyer rates start at 4.65% for a two-year fix at 85% LTV with a £995 fee. At the higher end of the LTV range, NatWest's 95% LTV products are priced from 5.3% on a two-year fix and 5.16% on a five-year fix, both fee-free.
Barclays, Nationwide, Coventry Building Society, and Virgin Money had each announced mortgage rate increases earlier this week.
“The resumption of hostility in the Middle East has caused further uncertainty in financial markets, as the threat of higher interest rates returns," said David Hollingworth, associate director at L&C Mortgages. "That’s affecting lenders’ funding costs and has already resulted in several major lenders announcing that they have increased fixed rates or are about to."
He warned that multiple lenders moving in quick succession typically signals others will follow, and urged borrowers to act promptly to avoid missing some of the lowest available rates.
Meanwhile, Nationwide has expanded its loan-to-income (LTI) lending criteria, allowing eligible applicants to borrow up to six times their income.
The change applies to homemovers and existing customers remortgaging with additional borrowing who have an eligible income of £75,000 or more, whether applying individually or jointly. Self-employed borrowers are included on the same terms as employed applicants.
Existing Nationwide customers face no minimum income threshold when accessing the six-times multiple, provided they are moving home, porting their mortgage, or borrowing more.
"More of the banks and building societies are offering up to six times salary these days to boost their lending volumes as they try to issue more mortgages, so there is a lot of competition in this part of the market," said Aaron Strutt, product director at Trinity Financial. "Nationwide is clearly making this change to make it easier for borrowers to raise a sufficiently large mortgage to help them buy the property they want.
"This move is interesting timing as Nationwide has just bumped up many of its rates by up to 0.35%. When rates go up, criteria needs to ease to attract more borrowers. Nationwide is already one of the main lenders offering income stretch mortgages especially via its first-time buyer helping hand scheme. A joint income of £75,000 means the higher income multiple is clearly available to lots more people even though many would prefer not to be taking such a large income stretch."
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