NATWEST eases mortgage stress testing rules to allow families to borrow up to £33,000 in additional fees – launching a joint borrower sole proprietor loan and adding a 4% increase in loans.
All mortgage clients that High Street Bank, consistent with other major lenders, relaxed their affordability calculations.
It said the change in its stress rate means that “a typical household will be able to reach up to £33,000 while still adopting long-term stress rates to prevent future interest rates from rising”.
The business will also debut 60% of loans in two- and five-year periods, with a valuation of 3.88%.
The lender also registered for the first time a family-backed mortgage that allows qualified first-time home buyers to increase the amount they can borrow by combining income and income from family members or friends while still purchasing the property in their own name.
The lender said, for example, FTBs that earn £28,000 salary through NATWEST’s existing collateral products can reach up to £124,450.
The FTB’s budget cap is about £138,000 when it comes to wishing to buy their first home.
But the company added that its family-backed mortgage allows FTB to add family members or friends to the mortgage.
For example, if family members or friends earn £45,000, this arrangement will immediately increase the maximum borrowing potential of FTB to £246,000, bringing their property budget to about £273,000.
Barry Connolly, managing director of NATWEST Home Buying, said: “Today, launching a family-backed mortgage enhances the borrowing capacity of potential homeowners by enabling them to combine with family or friends while retaining independence in their own name.
“In addition, we have announced that we have revised the affordability of mortgage clients, enhancing the borrowing potential of hundreds of thousands of potential homeowners while continuing to ensure they can afford mortgages in the long term.”
Earlier this month, Lloyds Banking Group, which owns Halifax, simplified affordability calculations in its lenders, with lenders in Remortgagers going to allow typical households to borrow an additional £38,000.
Santander said this will also reduce mortgage stress testing, meaning some customers can borrow £10,000 to £35,000.
The lenders’ moves came after financial conduct authorities said last month that lenders were “too cautious” in granting FTB home loans under current rules.
FCA CEO Nikhil Rathi said in March that under existing regulatory rules, lenders have some degree of “flexibility” in their stress tests for first-time home buyers, but they have not exercised.
