Skipton Building Society is taking swift action to support first-time buyers following a key regulatory shift by significantly easing its loan-to-income (LTI) lending rules and lowering its minimum income criteria.
The mutual has reduced its minimum income requirement from £50,000 to £40,000 for borrowers seeking an LTI above 4.49x – making it one of the lowest income thresholds available for high LTI lending in the UK mortgage market.
The move comes after the Prudential Regulation Authority (PRA) updated its guidance to enable more high LTI loans, a change Skipton has long advocated.
Skipton will now offer lending up to 5.5 x income for loans up to 90% loan-to-value (LTV), and 5 x income for loans above 90% LTV, for eligible borrowers earning £40,000 or more. It is also increasing the maximum LTI on its 100% Track Record mortgage – which requires no deposit – from 4.75x to 5x.
INCREASE BORROWING CAPACITY
The changes mark a further push by Skipton to address affordability challenges in the housing market, particularly among younger buyers and renters struggling to save for a deposit.
Indeed, they could significantly increase borrowing capacity. For example, a borrower earning £41,000 with a 10% deposit could previously borrow up to £184,090; under the new criteria, they may now be able to access up to £225,500 – a rise of £41,410, or 22%.
Meanwhile, someone on a £60,000 salary using the 100% Track Record product could now borrow £300,000, up from £285,000 – an uplift of £15,000, or 5%.
Skipton is also maintaining its inclusive approach by allowing up to four applicants per mortgage and taking all four incomes into account through its Income Booster feature – enabling families and friends to combine resources to meet affordability requirements.
SUPPORTING FIRST-TIME BUYERS
Charlotte Harrison, CEO of Home Financing at Skipton Building Society, says: “We’ve campaigned for change to the Loan-to-Income 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 changes we’ve announced today are a practical step that will make a real difference, by helping even more people take that first step onto the property ladder while ensuring we continue to lend responsibly.
“The PRA has estimated LTI changes could support an additional 36,000 first-time buyers into homeownership each year. We look forward to working closely with regulators and industry partners to build on this progress.”
