Leeds Building Society is increasing the maximum amount that first-time buyers can potentially borrow as a multiple of their earnings, with the launch of a new mortgage range.
Those with a household income of at least £40,000 might now secure loans up to 5.5 times their earnings, a substantial leap from the society’s former cap of 5.25 for newcomers and 4.5 for other borrowers.
Reflecting on its lending patterns over the recent spring and summer months, Leeds Building Society anticipates that first-time buyers could access up to £52,000 more than before, based on average borrowing under the previous loan-to-income limits.
The mutual said it has also made improvements in assessing how much borrowers can afford to repay.
Both single and joint applicants, including self-employed individuals, are poised to benefit from the new Income Plus mortgage options, provided they can muster a minimum deposit of 5%, or 15% for new-build flats.
These mortgages, exclusively available through brokers and intermediaries, are all fixed for five years.
Among the offerings is a product charging 4.40% interest for those with a 25% deposit, accompanied by a £999 fee, alongside a fee-free option at 5.19% for those with just a 5% deposit.
David Hollingworth, associate director at L&C Mortgages, said: “We know that first-time buyers are not only grappling with building a deposit but also with the affordability constraints that high house prices bring.
“Income Plus seeks to address this by providing an alternative option for those with a smaller deposit but importantly also enabling a higher borrowing amount for those that can demonstrate it will be affordable.”
David O’Leary, executive director at the Home Builders Federation, commented: “The lack of appropriate mortgage finance is a key barrier for many households who would otherwise be able to take their first steps on the housing ladder and this suppression of effective demand for new homes is holding back housing delivery.”
The launch comes ahead of stamp duty changes in England and Northern Ireland from April 2025, which will reduce the “nil rate” stamp duty threshold for first-time buyers to £300,000 from £425,000.
Aneisha Beveridge, head of research at Hamptons, said: “The number of sales being agreed is ending the year strongly as buyers look to secure a home ahead of the stamp duty rise next year.”
However, she warned: “But the window to lock in a pre-April 2025 completion is closing quickly.”
She added: “The chance of a sale agreed in December reaching completion before next April is now close to a coin flip. Sales that are part of long chains or where management companies are slow to respond to inquiries are now likely to incur higher stamp duty bills.”
“Historically, only 37% of purchases agreed in January go on to complete by April of the same year.”
“Buyers are beginning to factor in the cost of higher stamp duty bills and recent small increases in mortgage rates by pushing for bigger discounts, and often sellers, who are keen to agree a deal before Christmas, are accepting.”
“However, those purchasing more expensive homes have been less sensitive to the change.”
According to Hampton’s data, buyers who had an offer accepted in November 2024 negotiated a substantial median average discount of £5,000 off the asking price.
Signaling the most significant discount since December 2023 and representing a doubling from the £2,500 seen in October 2024, Hampton’s analysis is grounded on data from around 550 estate agency branches across Britain under the Connells Group umbrella.
