Joint borrowers earning £150,000 or more can now borrow up to 6.5 times their income
NatWest has raised its maximum loan-to-income (LTI) ratio for joint applicants with combined earnings of £150,000 or above, offering up to 6.5 times income at 75% loan-to-value (LTV) or below.
The change, announced today, is the lender's fourth LTI adjustment this year and extends the borrowing capacity available to higher earners seeking larger mortgage loans.
"This is an unexpected move from NatWest that makes their proposition more appealing to higher earners looking for larger mortgage loans especially as the bank often has best buy mortgage rates," said Aaron Strutt, product director at Trinity Financial.
"NatWest is clearly targeting the higher earners keen to secure bigger mortgages and they can offer larger income multiples now that the lenders are under less pressure from the financial regulators to hold off issuing more generous mortgages."
Strutt (pictured right) noted that while NatWest has historically been a relatively generous lender, the policy now positions it among the most liberal income multiple providers for higher earners. He drew a comparison with HSBC, which made a comparable change last year but set its threshold at £100,000 in earnings to access the 6.5 times salary multiple.
Across the market, income multiple policies vary considerably. While HSBC offers up to 6.5 times, Teachers Building Society and April Mortgages lend up to seven times salary for eligible borrowers. Nationwide and Barclays lend up to six times income; and Halifax, TSB, and Santander up to 5.5 times.
He urged caution for prospective borrowers, however. "We know the lenders are keen for business but this income stretch mortgage is large and borrowers will really need to think carefully before they take on such a big debt. Even if they earn £150,000," he explained.
Strutt acknowledged the commercial rationale behind the move, suggesting it would generate additional business for the bank given that many applicants require only a modest uplift in loan size to proceed with a purchase. He also pointed to broader affordability pressures in the mortgage and property markets, noting that the policy change addresses these constraints primarily at the top of the income scale.
"Many potential buyers will be reading this policy change and wondering why applicants need to earn so much to get the higher income multiples," Strutt said. "At the moment, they don't have to because there is a selection of lenders offering between five- and seven-times salary to many first-time buyers. There are also more low-deposit mortgages."
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