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First-time buyers will be able to borrow up to 5.5 times their salary from the UK’s biggest mortgage lender.
The First-time Buyer Boost from Lloyd’s has made £2bn available for those looking to borrow more than 4.5 times their income, increasing the amount that can be borrowed by more than 20 per cent.
Assuming a household income of £50,000 and deposit of 10 per cent, there could be a boost to the maximum loan available from £224,500 to £275,000. However, as that 10 per cent deposit will be the minimum required, average house buyers will need to save at least £28,700 to qualify.
To qualify for the “boost”, borrowers need to apply for a first-time buyer mortgage through Lloyds, have a total household income of £50,000 or more, a loan to value (LTV) of up to 90 per cent and not use shared ownership or shared equity.
Lloyd’s isn’t the first to make such a move. Nationwide has offered the same loan since 2022 and Skipton Building Society offers a 5.5 times income-to-loan on its no deposit mortgage.
It comes as new figures revealed today showed annual house price growth has picked up at the fastest rate in over two years.
Across the UK, property values increased by 2.4 per cent year-on-year, Nationwide Building Society said.
This means the average home cost £6,222 more than the previous year, with an average sale price of £265,375.
The number of mortgages approved for home buyers has also jumped to its highest level since the month the mini-budget was delivered under then-prime minister Liz Truss.
The Bank of England recorded 62,000 approvals for house purchases in July – the highest total since 65,100 were recorded in September 2022.
Mortgage rates surged after then-chancellor Kwasi Kwarteng’s September 2022 statement delivered as part of a “growth plan”.
In recent weeks, mortgage rates have been edging down and earlier this month, the Bank of England base rate was cut by 0.25 percentage points to 5%.
Andrew Asaam, homes director at Lloyds Banking Group, said: “Getting the keys to a first home is a big deal, but it’s tough right now. Aspiring homeowners have been struggling with house prices rising faster than their wages. They need to save for a deposit, keep up with rent, and choose the right mortgage.
“Becoming a homeowner is one of the most fundamental things you can do to secure your long-term financial future, but it’s not easy. First-time Buyer Boost aims to make this journey easier by helping people make their income go even further.”
