Nationwide, the UK’s largest building society, has revealed plans to raise its limit on high loan-to-income (LTI) mortgage lending.
As part of this move, the lender is adjusting its eligibility criteria for first-time buyers. From Wednesday, individuals earning at least £30,000 will now be able to apply for a mortgage—down from the previous requirement of £35,000.
For joint applicants, the income threshold has also been lowered. Couples with a combined income of £50,000 can now qualify, compared to the earlier £55,000 benchmark.
What did the commentators say?
Although Rachel Reeves’ plans are being praised for aiming to increase homeownership, some regulators have expressed concerns. According to The Telegraph, these proposals may clash with banks’ commitments to support borrowers in managing their repayments. Nikhil Rathi, Chief Executive of the Financial Conduct Authority, warned earlier this year that easing regulations could backfire, as “not everybody is going to play completely by the rulebook”, which could lead to an increase in home repossessions.
Commentators have also questioned the long-term effectiveness of these reforms. Writing in The Spectator, Matthew Lynn suggested that Reeves may be trying to channel the economic boldness of the 1980s with a “Big Bang”-style deregulation. However, he argues that the fundamental issue isn’t how much banks can lend—it’s that the UK simply doesn’t build enough homes, pushing prices beyond what many can afford. Loosening lending criteria, he says, risks fuelling another housing bubble. “Do we really need another 2008 financial crisis?” he asks.
In The Independent, the reforms were described as a “spin of the financial services roulette wheel”, driven more by limited political options than sound policy. Critics suggest that these measures reflect desperation rather than a carefully thought-out plan for sustainable economic growth.
Some feel that the proposals resemble the pre-2008 era, where financial deregulation led to risky behaviour across the sector. Back then, some lenders took on too much risk, resulting in widespread economic damage and the collapse of entire banks. While today’s proposals are not as extreme, there’s a sense that Reeves is steering policy in a similar direction.
Unlike the 2000s, when borrowers could self-certify their income, we haven’t returned to such lax standards just yet. Still, Reeves’ direction seems to echo aspects of that era, raising concerns about the potential consequences.
Perhaps the biggest risk for the Chancellor is political. If this “bonfire of red tape” fails to deliver a measurable boost to the nation’s economy, she may be left without many options. In that case, it’s possible that pressure could mount on the Prime Minister to consider a change in leadership.
What next?
Ahead of her Mansion House address later this evening, Chancellor Rachel Reeves has begun to set out her wider agenda for reforming the UK’s financial sector. During a visit to Leeds, Reeves unveiled a range of proposed changes that aim to modernise regulation, reduce unnecessary red tape, and stimulate growth across the economy.
One of the key reforms involves a plan to cut what Reeves described as “unnecessary costs” associated with the current rules around senior banker accountability. These rules, introduced after the 2008 financial crash, were designed to ensure that top executives in the banking sector could be held responsible for misconduct or poor decision-making. Reeves believes that some of these regulations now create burdens without delivering sufficient benefit, and that easing them could help boost competitiveness in the financial sector.
In an effort to encourage greater public participation in the financial markets, the government is also launching a national campaign to get more consumers investing their savings in stocks. Reeves hopes this move will not only help individuals build personal wealth but also unlock more capital for British businesses and spur long-term economic growth. It’s a strategy that leans on the idea of making investing more accessible and less intimidating for ordinary savers.
Another significant part of the reform package is a review of the post-2008 ring-fencing rules. These rules were originally implemented to protect consumers by separating traditional retail banking activities—like savings accounts and personal loans—from the riskier investment operations of the same institutions. While intended to safeguard the public and the economy from another banking collapse, critics have argued that the rules are now too rigid and may be holding back innovation and flexibility in the sector. The proposed review will assess whether these protections are still fit for purpose or if they need to be updated in today’s financial landscape.
In a controversial move, the reforms will also reduce the independence of the Financial Ombudsman Service (FOS). The FOS has traditionally acted as an impartial body to resolve disputes between consumers and financial institutions. Critics worry that weakening its autonomy could compromise its ability to act in the best interest of the public. Alongside this, the compensation framework for wronged customers is set to be altered. The maximum interest rate and total amount that banks are required to pay out to customers who have been mistreated will be lowered, a decision that has already sparked concern among consumer rights groups.
These proposed changes are part of a wider push by the Chancellor to signal a break from the more cautious regulatory approaches that defined the post-crisis years. Reeves appears to be positioning the UK as a more agile and investor-friendly economy, but these moves are also likely to prompt scrutiny from financial watchdogs, opposition parties, and advocacy groups worried about potential risks to consumer protection.
As the full details of Reeves’ Mansion House speech emerge, the financial sector—and the wider public—will be watching closely to see how this balance between growth and regulation is managed in practice.
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