Skipton Building Society is lowering the minimum income threshold required for borrowers seeking high loan-to-income (LTI) mortgages, in a move designed to help more first-time buyers access the housing market.
The mutual will now allow applicants with a household income of £40,000 to borrow at an LTI above 4.49x – down from the previous £50,000 threshold. This will enable eligible buyers to access LTI ratios of up to 5.5x for loans up to 90% loan-to-value (LTV), and 5x for borrowing above 90% LTV.
The announcement follows recent changes by the Prudential Regulation Authority (PRA), which relaxed its stance on high LTI lending following calls from across the mutual sector to ease restrictions.
The changes could result in a significant increase in borrowing power. According to Skipton, an applicant earning £41,000 with a 10% deposit could previously borrow up to £184,090. Under the new criteria, the same applicant could now borrow as much as £225,500 – an increase of £41,410, or 22%.
In addition, the maximum LTI on Skipton’s 100% Track Record mortgage – which requires no deposit – is also increasing from 4.75x to 5x income. This means a household earning £60,000 could see their borrowing potential rise from £285,000 to £300,000, a 5% uplift.
The lender said the changes will remain subject to the usual affordability and stress testing, and reaffirmed its commitment to responsible lending.
Skipton’s chief executive of home financing, Charlotte Harrison, said the society had campaigned for reform to LTI rules in order to give more first-time buyers a realistic chance at homeownership.
“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,” she said.
“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.”
Skipton has also highlighted the role of its Income Booster product in enhancing affordability. The lender is one of the few that allows up to four people to apply jointly, combining all their incomes to assess borrowing capacity. This facility is open to friends or family members supporting a buyer, as well as groups purchasing together.
The mutual has been among the most active in seeking innovative solutions for first-time buyers, having launched its no-deposit Track Record mortgage in 2023 to support long-term renters with a history of regular payments.
