Nationwide says 'relaxing' rule 'could help 10,000 more people'

Nationwide is advocating for an easing of mortgage affordability regulations to give approximately 10,000 more aspiring first-time buyers a chance, as the building society marked its strongest month of lending ever on record.

The mortgage provider noted a surge in home buyers eager to seal their property deals before the impending tax relief reduction come April. It boasted a pre-tax profit of £2.3 billion for the year ending March, jumping by 30% from the £1.8 billion gained in the prior year.

A record year of lending resulted in total loan balances rising to £275.9 billion from £204.5 billion in 2023. Nationwide reported an unprecedented level of mortgage lending activity for March, accompanied by an extraordinary peak on the last day of the month.

These remarks resonate with Lloyds Banking Group's announcement about achieving their highest volume of lending on one day in March.

Due to stamp duty reliefs becoming less favourable from April, there was a flurry to complete property purchases prior to the expiration date. Stamp duty, a levy on real estate transactions, is applicable in England and Northern Ireland.

Muir Mathieson, Nationwide's chief financial officer, said: "What's been fascinating though is that, in April and May, the strength of the mortgage market has continued.

"We haven't seen the cliff-edge, that drop-off in mortgage activity in April and May that we were expecting, quite frankly. The mortgage market continues to be really resilient and we're intending to remain competitive within it."

Mr Mathieson disclosed the group had been urging the Bank of England to reconsider its restrictions on high loan-to-income lending. The building society, like other mortgage providers, is confined to granting at most 15% of new mortgages to clients borrowing quadruple their income or more.

Nationwide admits it hits this threshold annually due to the surge in first-time buyers needing larger loans compared to their earnings.

Debbie Crosbie, Nationwide's chief executive, added: "The reality is that if we didn't have the limit as low (as it is), then we could be lending to more first-time buyers.

"For Nationwide alone we think it could be an extra 10,000 (per year), and it could be multiples of that if the market limit was raised."

Mr Mathieson noted that thanks to tighter affordability checks, the incidence of higher loan-to-value mortgages falling into arrears is often half that compared with their other loans.

Moreover, Ms Crosbie commented on the fierce competition within the mortgage industry, noting: "Our margin that we're earning is definitely lower this year than it has been in previous years."

Nationwide, which bought rival bank Virgin Money last year, handed out a record £2.8 billion in value to members over the year including £1 billion in member rewards.

The mutual - which means it is owned by its customers, rather than shareholders - said more than four million of its members will receive its 2025 "fairer share" payment of £100 each.