Britain’s biggest building society is to let first-time buyers borrow up to six times their earnings in what has been labelled a “gamechanging” move that ramps up the mortgage price war.

Weeks after it was announced that the Halifax and Lloyds would allow new buyers to take out loans worth up to 5.5 times their household annual income, Nationwide said it would now go up to six times income – a first for a major high street lender.

Nationwide is also cutting its mortgage rates and increasing its maximum loan sizes, so that someone taking out a home loan for more than 90% of the property’s value will now be able to borrow up to £750,000 – up from the existing £500,000, and higher than the £570,000 limit at many rivals.

The moves come amid a mortgage price war that has led to lenders jostling to cut their rates after the Bank of England’s 1 August interest rate cut and the expectation of more reductions to come.

In July, new fixed deals priced at below 4% went back on sale for the first time since February, and Nationwide’s changes include a range of fresh rate cuts that mean it will be the first major lender “for a long time” to offer a fixed deal priced at below 5% to first-time buyers borrowing 95% – that is, those who can only afford to put down a 5% deposit.

However, probably Nationwide’s most eye-catching move is its decision to increase the maximum sums it is willing to offer borrowers.

Traditionally the typical maximum for how much someone could borrow was 4.5 times their annual income, but in recent years a growing number of lenders have been offering higher income multiples. On 29 August, Lloyds Banking Group said its Lloyds and Halifax brands would now allow new buyers to take out loans worth up to 5.5 times their household annual income – up from 4.49 times. Several other leading lenders also go up to 5.5 times.

However, not many mortgage providers go up to six times income or more: one that does is Perenna, while in 2021, another lender, Habito, said it would let some homebuyers borrow up to seven times their income.

Nationwide previously increased its maximum income multiples in April 2021, when it lifted the figure to 5.5 times earnings for certain first-time buyers as part of an initiative called Helping Hand.

It said that from Tuesday it would give new buyers the option of borrowing up to six times their income when taking out a five- or 10-year fixed rate for up to 95% of the property’s value.

This change means a first-time-buying couple with a joint income of £50,000 can now borrow up to £300,000 – up from £225,000 under Nationwide’s standard lending terms, and up from £275,000 under Helping Hand.

Nicholas Mendes​, a mortgage technical manager at the broker John Charcol, said Nationwide’s move was “a gamechanger for first-time buyers” that would “deliver a powerful boost” towards tackling the significant affordability issues that had locked many out of home ownership.

David Stirling, an adviser at Mint Mortgages & Protection, said: “These are significant improvements … potentially increasing borrowing availability by up to 33%.”

Helping Hand has helped about 40,000 people on to the property ladder since it was launched three years ago, said Debbie Crosbie, Nationwide’s chief executive. “We want to do more and are boosting the scheme to six times income and increasing the maximum loan size. This, alongside our most recent rate cuts, further strengthens our market-leading position.”