Borrow 5.5 x salary?

JamieJ89

Interestingly read that Nationwide will offer mortgages 5.5x annual salary - will this become the norm do you think? Will we see more of this now?

https://www.thetimes.co.uk/article/boost-first-time-buyers-mortgage-limits-increased-9bp8p6lkq?shareToken=c4c5b9eb31f5a37687b91160ce697204

[Deleted User]

doubt it.  My guess is that they are trying to claw some market share back as they have been next to useless over the last 6 months (in my experience anyway).   They havent been taking variable pay in applications (changes next week too) so they have probably got a good amount of low risk business in the books to try get some of the higher risk and higher multiples.  

Also its only available on 5 and 10 year fixes and the rates on those at 90% are pretty steep. Im generally trying to do 2 year deals at 90% and then remortgage at lower ltv if the client agrees. 

So Nationwide get to tie people in to high(ish) rates for a longer period of time whilst still not lowering rates to compete on price.  

I can see why they are doing it but i cant see it driving an industry change . 

Also, just because they go to 5.5x doesnt mean people will get that much. They might put a higher weight on credit card debt for instance which will lower the borrowing amounts. 

smitchy73

Deleted_User said:

 They havent been taking variable pay in applications (changes next week too) 

Can you expand on this part if at all possible even feel free to IM me if it's possible or a link to the details of this, very interested in this part of your conversation.

[Deleted User]

smitchy73 said:

Deleted_User said:

 They havent been taking variable pay in applications (changes next week too) 

Can you expand on this part if at all possible even feel free to IM me if it's possible or a link to the details of this, very interested in this part of your conversation.

From tomorrow they will be taking overtime, bonus, commission again.   The email didnt say if it was back to 100% as it was before.  They havent been taking any variable pay since covid started really 

smitchy73

I'm assuming they are still not taking any furlough pay into consideration ?

K_S

smitchy73 said:

Deleted_User said:

 They havent been taking variable pay in applications (changes next week too) 

Can you expand on this part if at all possible even feel free to IM me if it's possible or a link to the details of this, very interested in this part of your conversation.

@smitchy73 https://www.mortgagesolutions.co.uk/news/2021/04/21/nationwide-opens-door-to-bonus-overtime-and-commission-income/

silvermountains

Deleted_User said:

Also its only available on 5 and 10 year fixes and the rates on those at 90% are pretty steep. Im generally trying to do 2 year deals at 90% and then remortgage at lower ltv if the client agrees. 

This is interesting... isn't that a bit of a gamble that house prices won't drop off a bit in the next two years? If there's even the smallest correction downwards then after two years they won't have reached 85%... and there's no guarantee hat rates won't slowly rise over this time either?

ukri

It’s a balancing act and the Adviser will be led by what the borrower wants.