Britain’s biggest building society Nationwide has tightened up on its lending criteria – with a clampdown on loan to income multiples that appears to go considerably further than Bank of England guidelines.

It has also tightened its stress testing, as warnings mount on impending rises in interest rates.

As of yesterday, it capped all of its new lending to 4.75 times income. It had previously applied caps on individual cases but the new ceiling is to be applied across the board.

The Bank of England has said that only 15% of all new lending should be at 4.5 times income or higher from October, suggesting that most new loans should be at no more than 3.5 times annual income.

However, Nationwide’s new limit suggests that it is being far more cautious.

The move follows limits placed by RBS and Lloyds, which have imposed 4 times income on loans where the property is worth £500,000 or more.

The mutual has also, as of yesterday, raised its stress test, meaning that new borrowers will have to prove they can repay mortgages if interest rates go to 6.99%.

A spokesperson said: ”Nationwide is increasing its stress rate as a result of the recommendations made by the Financial Policy Committee and our approach to affordability is subject to continual review.

“We have previously operated an income multiple cap. This is one element of its affordability calculation.

”Previously the cap has varied depending on the circumstances of the individual application but we are now applying the new criteria to all forms of residential lending.”