Leeds Building Society boss calls for loosening of lending rules to help first-time buyers

Richard Fearon, LBS chief executive, told The Yorkshire Post: “We launched something at the back end of last year called Income Plus, which is a proposition specifically about supporting first-time buyers.

"That has been our most successful product launch ever. It shows us how much demand there is from first-time buyers and how much they would benefit from greater flexibility in the lending rules.

"The loan-to-income cap is set by the Financial Policy Committee, which is restricting our ability and that of other lenders to provide affordable mortgages. We have called for that cap to be increased. I think that is something the Government can really look at that would help benefit aspiring first-time buyers.

"We have proved with our launch how much demand is out there with.”

The mutual said had received a record volum of applications between December and February for its Income Plus range, which allows first-time buyers to borrow an average of £66,000 more on 95 per cent loan-to-value lending compared to a standard mortgage.

Mr Fearon highlighted a recent speech by FCA chief executive Nikhil Rathi which said the regulator intends to “move at pace” on dozens of growth proposals it has made to Prime Minister Keir Starmer, which include measures around mortgage affordability.

In January, Mr Rathi wrote to Sir Keir and Chancellor Rachel Reeves to state that the FCA intends to support the Government’s growth agenda by “going further” on measures to remove unnecessary regulation.

He said his plans include “simplifying responsible lending and advice rules for mortgages, supporting home ownership and opening a discussion on the balance between access to lending and levels of defaults”.

The FCA also said it would consult on removing maturing interest-only mortgage “and other outdated guidance” as well as working with the Government “to remove overlapping standards” such as the Mortgage Charter.

Mr Rathi sits on the Financial Policy Committee, alongside Bank of England executives and external board members. Bank of England governor Andrew Bailey said in January that he was “very happy to have a very open public debate” on mortgage lending restrictions but added that the current rules have proved beneficial in preventing repossessions during the economic shocks of recent years.

Mr Fearon said: “I think the Government are open to this. We think there’s a very good case for change where we can provide more affordable mortgages but can also strike the right balance on a healthy and sustainable mortgage market.”

His comments follow similar recent remarks by Nationwide’s director of home Henry Jordan.

Mr Jordan said: “We believe it’s important to put first-time buyers first, given how tough it is to get on the housing ladder. Our enhanced Helping Hand mortgage is extremely popular with first-time buyers and we are committed to finding new ways to ease affordability.

"Increasing the loan-to-income lending cap would also enable lenders to support more first-time buyers.”