NatWest has announced an expansion of its loan-to-income (LTI) ratio, allowing eligible borrowers to access larger loans. This move is expected to benefit higher earners, particularly those with single or joint incomes above £40,000. The changes aim to increase borrowing capacity, making it easier for certain customers to secure financing.
Increased Borrowing Limits for Higher Earners
According to Birmingham Live, the new lending criteria from NatWest apply to borrowers earning more than £40,000 annually. Those taking loans with a loan-to-value (LTV) ratio between 75% and 90% can now qualify for an LTI of up to five times their income.
For individuals earning over £75,000 or joint applicants with a combined income exceeding £100,000, NatWest is offering an LTI of up to 5.5 times their income. This adjustment could make it easier for higher earners to access financing and manage their financial needs more effectively.
A Competitive Move in the Lending Market
NatWest’s decision follows similar changes from other lenders, including Marsden Building Society, Loughborough Building Society, and TSB. The financial sector has seen increasing pressure to expand lending options, particularly as affordability remains a challenge for many consumers.
Nationwide recently urged the government to review lending caps, arguing that restrictive LTI limits make it difficult for many customers to secure financing. While easing borrowing limits could improve access to funding, financial regulators remain cautious about the potential risks of higher debt levels.
Concerns Over Financial Stability
Some experts have raised concerns that increasing LTI ratios may lead to a rise in financial strain and loan defaults. The Bank of England has highlighted the need for a public debate on the trade-off between expanding lending access and the risk of increased financial instability.
Currently, the UK sees around 1,000 loan defaults every three months, and looser lending criteria could contribute to higher household debt burdens. NatWest, however, maintains that its updated policies are designed to help responsible borrowers while ensuring continued financial prudence.
