Nationwide customers warned over new £55,000 earnings rule

Nationwide is bringing in a brand-new £55,000 earnings rule. Nationwide is increasing the minimum earnings required when offering higher-risk mortgages to first-time buyers, the building society - which is one of the largest in the UK - has said.

Nationwide launched its Helping Hand mortgage, to help potential home owners who do not think they can borrow enough to buy their first property. It is available to eligible first time buyers with the bank's five- and ten-year fixed rate mortgages, up to a 95 per cent loan to value.

The Helping Hand mortgage came about as the building society said that "to buy homes of our own was one of Nationwide's founding principles." "But as times have changed, it's become harder for first time buyers." It said: "Which is why we've launched our Helping Hand mortgage, to help those who don't think they can borrow enough to buy their first home."

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In an email to brokers, Nationwide revealed that it is increasing the earnings figure for its Helping Hand mortgages from £35,000 to £40,000 for a sole applicant, or £55,000 for joint applicants. Graham Cox, director at Bridging Hub, said: "I actually think this is prudent. Someone on £35000 p.a. doesn't have a lot of discretionary spending wiggle room in this day and age, so borrowing at a high 5-6 times income on what is a relatively modest wage is asking for trouble.

Meanwhile, Jack Tutton, director at SJ Mortgages said: "Nationwide's decision to increase the minimum income for sole applicants to have access to their Helping Hand product is yet another kick in the teeth to those trying to buy on their own.

"It is often these people who find it the hardest to achieve their dream of owning their own home. Their decision to increase the minimum income required from £35,000 to £40,000 now means that to be eligible for this, you have to be earning more than the UK's average salary for full-time employees.

"This will compound the issue further for those wanting to get onto the property ladder." Ben Perks, managing director at Orchard Financial Advisers, said: "Nationwide have just cut out huge swathes of prospective first-time buyers across the country. A £5,000 increase may seem inconsequential but when it goes above average earnings, it is problematic."

Especially given the expected reduction in pay increases following the Budget. People can't just nip into their head office and ask for a pay increase anymore." Elliott Culley, Director at Switch Mortgage Finance, commented: "The Helping Hand product has helped many first-time buyers get a foot on the property ladder.

"Increasing the income level you need to earn to be eligible will be a blow to some first-time buyers, however it's important this product remains available and if this increase means Nationwide remain in their regulatory limits and some may still benefit then this is a necessary step that has to be taken."