A raft of changes to mortgages will mean tens of thousands more first-time buyers will be able to afford a home, Chancellor Rachel Reeves is expected to announce later.
People seeking to take the leap from renting to owning their own home will get more options for mortgages at 4.5 times their income, following new recommendations from the Bank of England.
According to the government, this move will mean 36,000 extra mortgages in the first year.
An estimated 10,000 first-time buyers will also benefit from a shake-up of the salary thresholds for Nationwide’s Helping Hand mortgage coming into effect tomorrow.
Those who are eligible will be able to apply with a £30,000 salary – down from £35,000 – while joint applicants can apply with a £50,000 – also down £5,000.
Nicholas Mendes, mortgage technical manager at broker John Charcol, said for people on those salaries, this change ‘could be the difference between continuing to rent and finally being able to move into a home of their own’.
He added: ‘People working in care, education, retail, and public service are typically in long-term employment and manage their finances carefully, yet they are the very people who have found the doors to homeownership closed to them.
Ready to start your homebuying journey?
You can access completely fee-free mortgage advice with London & Country (L&C) Mortgages, a partner of Metro. Customers benefit from:
– Award winning service from the UK’s leading mortgage broker
– Expert advisors on hand 7 days a week
– Access to 1000s of mortgage deals from across the market
Unlike many mortgage brokers, L&C won’t charge you a fee for their advice.
Find out how much you could borrow online
Mortgage service provided by London & Country Mortgages (L&C), which is authorised and regulated by the Financial Conduct Authority (registered number: 143002). The FCA does not regulate most Buy to Let mortgages. Your home or property may be repossessed if you do not keep up repayments on your mortgage.
‘This reform suggests that financial discipline is being recognised more broadly than by salary alone, and that is a very welcome shift.’
Reeves is also set to announce a review of Financial Conduct Authority (FCA) lending rules which could mean prospective buyers will be able to use their rent records to show they can afford mortgage repayments.
Meanwhile, a new government-backed mortgage guarantee scheme is being launched to encourage bankers to offer riskier loans.
The Chancellor will outline the changes when she makes an appearance in Leeds later today.
It comes ahead of her annual Mansion House speech in London this evening, when she is expected to slash regulations on the UK’s financial sector.
Reeves is expected to say: ‘Today, I have placed financial services at the heart of the government’s growth mission.
‘Recognising that Britain cannot succeed and meet its growth ambitions without a financial services sector that is fighting fit and thriving.
‘And I have been clear on the benefits that that will drive, with a ripple effect that will drive investment in all sectors of our economy and put pounds in the pockets of working people.’
Get in touch with our news team by emailing us at webnews@metro.co.uk.
For more stories like this, check our news page.
