Yet another major mortgage lender has increased the amount of deposit required from borrowers in light of the global credit crunch, which has resulted in far tighter credit conditions.
The nation’s second largest mortgage lender, Nationwide, has announced that borrowers will now have to put down at least a 10% deposit on all but two of its mortgage products.
This spells more bad news for those on low incomes and first time buyers, who struggle to raise the traditional 5% deposit let along the higher deposits that many lenders are now demanding.
Apart from two fixed rate and tracker deals borrowers will have to stump up 10% of the value of the property to Nationwide in order to qualify for a mortgage.
One variable rate deal for new borrowers will require a massive deposit of 25%. The changes are due to come into force at the beginning of May. New borrowers will also no longer be able to borrow more than £500,000 from Nationwide.
The changes will apply only to new customers, with existing Nationwide customers not being affected by the changes.
One official from the Nationwide said: “These changes will allow us to maintain control of the volume of business the society is attracting, while enabling us to continue offering our full range of mortgages to our existing members in a controlled and prudent way.”
An industry official said that getting a mortgage was getting more difficult. He said: “The biggest struggle now is not being able to afford a mortgage - it is being able to get one. Availability is the biggest hurdle despite all the Government efforts to get lenders lending.”
He added: “First-time buyers and people renegotiating their mortgage for the first time will be worst affected. When disposable income is already at breaking point for many, it is frankly impossible to see how those with limited savings will find a way to get a foothold on the property ladder.”
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