Nationwide caps mortgage lending due to virus
The UK’s biggest building society has tripled the deposit it will ask for from first-time buyers.
The Nationwide will lower its ceiling for mortgage lending to new customers in response to the coronavirus crisis.
It said the change, from Thursday, was due to “these unprecedented times and an uncertain mortgage market”.
First-time buyers are likely to be the most significantly affected because they often have smaller amounts saved to get on the property ladder.
Nationwide has reduced the proportion of a home’s value that is willing to lend from 95% to 85%.
So for example, if a property costs £100,000, a new buyer would now need a £15,000 deposit rather than a £5,000 deposit.
Nationwide made the move in case house prices fall and buyers go into negative equity – that is when the debt is greater than the value of the property.
But it was also to cut the risk of customers not being able to make repayments if they lose their jobs.