The chancellor has unveiled reforms that will help people struggling to get onto the property ladder.
Today (15th July) chancellor Rachel Reeves delivered a package of city-wide changes, otherwise known as ‘Leeds Reforms’, to a group of finance executives in the North West city. It is understood representatives from Lloyd’s banking Group and the Financial Conduct Authority attended the talk.
According to the government, the Leeds Reform will help the UK become the number one destination for financial services by 2035.
One of the biggest announcements that came from the chancellor’s speech was the plan to increase high loan-to-income mortgages, following recommendations from the Bank of England. This means people looking to buy a property will be able to apply for a loan 4.5 times their income.
According to the treasury, this decision alone should create up to 36,000 additional mortgages for first-time buyers.
What’s more, the government is also looking to implement a permanent mortgage guarantee scheme, which would ensure high loan-to-value mortgages are available even in times of uncertainty.
To give context about how much this support is needed, the latest figures show homeownership rates among young adults – particularly those aged between 25-34 – have plummeted, with only 39% owning properties in 2022/23 compared to 59% in 2000.
With this in mind, Nationwide – the UK’s biggest building society – announced plans to expand their first-time buyer mortgages support. This includes widening access to their ‘Helping hand’ scheme. The organisation claimed the change would support an additional 10,000 first-time buyers.
Alterations to company’s programme means from Wednesday, eligible first-time buyers will be able to apply for a mortgage with a £30,000 salary, down from £35,000 and joint applications with a £50,000 combined salary, down from £55,000.
‘The Prudential Regulation Authority’s (PRA) announcement unlocks lending for first-time buyers at what remains a difficult time for home ownership,’ Henry Jordan, Nationwide’s director of home, said. ‘It has given us the confidence to respond quickly by relaxing our lending criteria.’
The measures have been delivered ahead of the chancellor’s Mansion House speech that is due to take place this evening.
In a statement this morning, Reeves said: ‘We fixed the public finances and stabilised the economy. Now we need to double down on our global strengths to put the UK ahead in the global race for financial businesses, creating good, skilled jobs in every part of the country and helping savers’ money go further through our plan for change.’
Photo by Jakub Żerdzicki via UnSplash
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