Nationwide is increasing the sole applicant minimum income from £35,000 to £40,000 on its Helping Hand mortgages, as part of changes to terms and conditions.
Nationwide describes the popular mortgage as being "to help those who don’t think they can borrow enough to buy their first home".
It adds: "Helping each other 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, which is why we've launched our Helping Hand mortgage."
In an email to brokers, the bank set out the new eligibility criteria for the Helping Hand mortgage with a minimum income of £40,000 for a sole applicant, or £55,000 for joint applicants.
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Jack Tutton, Director at SJ Mortgages was not impressed: "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."
Michelle Lawson, director at Lawson Financial added: "This is a shame and a classic reason of inhibitive regulation putting the blockers on borrowers that would otherwise be good to lend to. It doesn't make sense to have a one-size-fits-all strategy and underwriters need to be left to underwrite again."
But, some have praised the move, which will keep the bank within the regulatory limit for lending to customers borrowing at higher loan to income levels, where first time buyers could borrow up to six times their income, up to 33% more than some other deals.
"I actually think this is prudent. Someone on £35,000 a year doesn't have a lot of discretionary spending wiggle room in this day and age, so borrowing at a high five or six times income on what is a relatively modest wage is asking for trouble," says Graham Cox, director at Bridging Hub.
"Extending credit terms so people end up in ever greater debt is not the answer, lower house prices are."
David Stirling, Independent Financial Advisor at Mint Mortgages & Protection agrees.
"This seems like a responsible lending idea from Nationwide," he says.
"Those with larger incomes generally have more disposable income and therefore access to larger income multiples on the Helping Hand deals should be reserved for people who can afford them.
"This maybe isn't the intended ethos of the Helping Hand scheme and could alienate those on lower incomes from the property market, which is becoming further out of reach for first-time buyers."
