Nationwide Implements Controversial Six-Times-Income Mortgage Policy
Nationwide Building Society has introduced a significant change to its mortgage lending criteria, now permitting customers to borrow up to six times their annual income. This new policy has already taken effect, marking a substantial shift from traditional lending practices that typically cap borrowing at lower multiples. However, mortgage specialists across the country have raised immediate concerns, describing the move as "not without risk" for both borrowers and the wider housing market.
Strict Income Requirements Accompany New Lending Rules
To qualify for this enhanced borrowing capacity, applicants must meet specific income thresholds. For individual borrowers, a minimum annual income of £75,000 is required, while joint applicants need to demonstrate a combined income of at least £100,000. These rules apply specifically to new customers who are either moving home or remortgaging their existing property with Nationwide. The building society, which maintains branches in Birmingham and throughout the UK, has positioned this change as a response to housing affordability challenges.
Mortgage Experts Voice Mixed Reactions and Serious Concerns
Ben Perks, Managing Director at Stourbridge-based Orchard Financial Advisers, offered cautious support while highlighting limitations. "This represents a positive step forward in addressing affordability barriers that force many borrowers to stretch their finances to the absolute limit," he acknowledged. "However, the income criteria raises questions about who actually benefits. Outside London and other high-value property areas, individuals earning £75,000 and couples on £100,000 are not typically those facing the most severe affordability challenges. Consequently, this policy may not assist the borrowers who need support the most."
Stephen Perkins, Managing Director at Norwich-based Yellow Brick Mortgages, expressed deeper reservations about the broader implications. "When restrictions on income multiples were previously relaxed, the justification was that some lenders would offer more while others wouldn't, maintaining an overall balance below concerning thresholds," he explained. "However, as anticipated, competitive pressures are driving more lenders to increase borrowing limits. This creates a snowball effect that could eventually lead to unaffordable mortgages becoming widespread. We must avoid repeating the conditions that contributed to the 2008 financial crisis."
Perkins further noted that while Nationwide currently maintains income minimums for this program, the absence of such requirements for existing customers signals a worrying trend toward progressively looser lending standards. "While increased borrowing capacity may improve some buyers' chances of purchasing property, it simultaneously exposes them to greater financial vulnerability in the long term," he warned.
Specialists Emphasise Risk Management Over Borrowing Capacity
Patricia McGirr, founder of Burnley-based Repossession Rescue Network, provided nuanced perspective on the policy's implications. "This doesn't constitute reckless lending in itself, but it serves as an important reminder that higher income doesn't automatically translate to lower risk," she stated. "Allowing borrowing at six times income could help maintain momentum in the housing market, particularly for home movers and those remortgaging who might otherwise find themselves stuck. However, this approach only remains sustainable while interest rates remain stable, employment prospects stay strong, and personal health circumstances don't change unexpectedly."
McGirr emphasised that even high earners can encounter financial difficulties when mortgage deals reset or personal circumstances shift unexpectedly. "This policy will suit a relatively narrow demographic with robust finances and substantial financial buffers," she observed. "It does little to address the broader affordability crisis affecting most prospective homeowners and should never be marketed as a comprehensive solution. The real danger lies in normalising higher income multiples instead of building genuine financial resilience among borrowers."
The mortgage specialist concluded with a fundamental principle of responsible lending: "Sensible mortgage provision isn't about determining how much someone can borrow during favourable conditions; it's about ensuring they can manage repayments when financial pressures inevitably arise."
