Leeds Building Society has sought to ease the path to home ownership for lower earners by reducing the minimum household income needed to access higher loan-to-income mortgages.
Applicants earning £30,000 per year – whether as single or joint households – can now be considered for residential mortgages at or above 4.5 times their annual income, following regulatory approval granted to the lender by the Bank of England. The previous threshold stood at £40,000.
The decision means that a household on £30,000 a year could now borrow up to £165,000 with a 95% loan to value Income Plus mortgage, provided they meet affordability criteria. This would bring homes priced up to £173,000 within reach, up from a previous ceiling of £141,000.
Leeds Building Society’s Income Plus range is aimed at helping first-time buyers onto the property ladder, and the changes apply across all residential lending, including low-deposit mortgages.
The Society said the move would broaden access to the housing market for many creditworthy borrowers who may have previously been constrained by income limits.
The announcement comes as the Prudential Regulation Authority recently amended its lending guidance, allowing individual lenders to exceed the industry-wide cap that restricts the proportion of loans above 4.5 times income to 15% of new business.
The adjustment followed representations from purpose-led lenders such as Leeds, who argued that the cap limited their ability to support younger and lower-income buyers.
In tandem with the income change, the Society has reduced its stress rate, further increasing its capacity to lend. This is part of a broader set of measures designed to aid first-time buyers, including Reach Mortgages for those with weaker credit profiles, a partnership with Experian Boost to help applicants improve their credit scores via open banking data, and its Home Deposit Saver product to support saving for deposits.
Matt Bartle, director of mortgages and savings at Leeds Building Society, said: “We welcomed the decision to consider allowing more high loan-to-income on a lender-by-lender basis and are very pleased to have gained the Bank of England’s permission.
“Lowering our minimum income requirements brings the dream of homeownership a step closer for more borrowers, including many earning below national average earnings.
“We understand the importance of being a prudent and responsible lender. We carry out detailed affordability checks to make sure borrowers can realistically afford repayments and not over-extend themselves financially.”
