Sponsored by Digital Look Events

Mortgage lenders demand bigger deposits

News for Spread Betters

PreviousPrevious
NextNext

There's a new Investor Edition of CMC Markets' spread betting platform... and it's exclusive to DigitalLook.com users...

Get full details about Marketmaker:Investor Edition here. Advertisement

Date: Monday 28 Apr 2008

LONDON (ShareCast) - Hopes that the £50bn bail-out announced last Monday by the Bank of England would ease the impact of the credit crunch on the housing market received another blow today when two of the UK’s major mortgage providers all but eliminated 95% mortgages from their ranges.

The Nationwide Building Society and Abbey have reduced their maximum loan sizes from 95% of loan-to-value (LTV) to 90% on virtually all of their mortgage offers.

Existing Nationwide customers will still be eligible for 95% LTV offers, and new customers will be able to take out a three-year fixed rate mortgage at 95% LTV, but the building society is reducing the total amount it is prepared to lend to new customers to £500,000 from £1m previously.

Nationwide will also prevent new customers who have deposits worth less than 25% of the mortgaged property from taking out a mortgage on its Standard Variable Rate (SVR). The building society’s 6.24% SVR mortgage had become popular in recent weeks as its fixed-rate and tracker offerings became less competitive.

Meanwhile, Abbey now only has one product for customers at a 95% LTV, and that is at a fixed rate of 6.99% over five years.

Abbey is also planning to limit “interest only” mortgage offers to 50% LTV.

The latest moves, which follow similar changes announced by other lenders such as Halifax, are expected to badly affect first time buyers and those who need to remortgage.

They reflect lenders’ nervousness over falling house values as well as funding shortages in the banking system.