Britain’s biggest building society will lend first-time buyers up to six times their income, increase the maximum amount that people can borrow and cut some mortgage rates from Tuesday.

Nationwide Building Society will increase the maximum loan-to-income (LTI) ratio through its Helping Hand mortgage range from Tuesday.

The mortgage will give people with a deposit as low as 5% the option of borrowing up to six times their income when taking a five or 10-year fixed-rate.

The Society’s standard lending maximum is 4.5 times income and it has previously offered a maximum multiple of 5.5 for first-time buyers taking out a Helping Hand mortgage.

Sole applicants for a Helping Hand mortgage need a minimum income of £30,000, while joint applicants need a combined income of at least £50,000.

Helping Hand has supported around 40,000 people onto the property ladder since we launched it three years ago

Debbie Crosbie, Nationwide Building Society

The increased maximum loan-to-income ratio means a first-time buyer couple with a joint income of £50,000 can now potentially borrow up to £300,000, assuming deposit and that no other costs affect affordability.

The society said that applications will continue to be subject to robust underwriting checks, including full assessments of credit scores and additional credit commitments.

Nationwide is also increasing its maximum loan sizes for borrowers above 75% LTV (loan-to-value) – which could be of particular interest to first-time buyers as for those with a deposit as low as 5%, the maximum is being increased from £500,000 to £750,000.

It pointed to UK Finance data showing around 5% of house purchase loans were for over £500,000 in the six months to June 2024.

The society is also cutting mortgage rates from Tuesday.

First-time buyer rates will be reduced by up to 0.31 percentage points and the Society will offer a sub-5% rate to borrowers with a 5% deposit.

The refreshed range includes a five-year fixed-rate for borrowers with a 5% deposit at 4.99%, reduced by 0.05 percentage points. The product has a £999 fee.

A 10-year fixed rate deal with no fee at 4.69%, reduced by 0.31 percentage points, will be available for people with a 25% deposit.

The Society said that, since 2021, it has lent more than £7.5 billion through Helping Hand, with around 40,000 borrowers using it to get onto the property ladder.

Building an adequate deposit is hard enough especially when the available mortgage borrowing is capped, and prices remain high

David Hollingworth, L&C Mortgages

Debbie Crosbie, Nationwide’s chief executive, said: “Helping Hand has supported around 40,000 people onto the property ladder since we launched it three years ago.

“We want to do more and are boosting the scheme to six times income and increasing the maximum loan size.”

Nick Mendes, a mortgage expert from broker John Charcol, described the announcement as a “game-changer for first-time buyers”.

He said: “This increased borrowing power can make all the difference for aspiring homeowners, especially in a challenging market where property prices often feel out of reach.”

David Hollingworth, associate director, communications at L&C Mortgages, said: “Building an adequate deposit is hard enough especially when the available mortgage borrowing is capped, and prices remain high.

“Opening the potential for higher borrowing amounts for the right borrowers will help target the twin challenges that first-time buyers face across the UK. Using the existing experience and success of Helping Hand to further enhance the maximum multiple will give more prospective first-time buyers the hope that ownership can become a reality.”

Nationwide said take-up of the Helping Hand mortgage so far has been particularly high in London and the South East, where house prices are often relatively high.

Matt Smith, a mortgage expert at Rightmove, said Nationwide’s changes are likely to be particularly beneficial in areas such as London and the South East where house prices are often higher – “and currently the average asking price of a home is more than five times the average salary of two people”.

Mr Smith said: “We’ve been highlighting affordability as a key issue facing first-time buyers this year and calling for innovations that help overcome these challenges in a responsible way.

“We welcome this move and hope this is the start of a new and accelerated wave of support for first-time buyers. The timing of this announcement will be welcomed by many first-time buyers, as we’re seeing a much more active housing market than at this time last year, with buyer demand increasing into the traditionally busy autumn season.”