Nationwide to triple deposits for first-time buyers
Nationwide is to triple its minimum required deposit from first time buyers for mortgages, as it steadies itself to avoid a crisis should the economy worsen.
The country’s second largest mortgage lender said it would be increasing its minimum deposit from five per cent to 15 per cent, withdrawing loan deals for new customers.
“The outlook for the mortgage market and house prices remains uncertain,” said Henry Jordan, director of mortgages at Nationwide.
“Our priority at this time must be to help members keep their homes. As such, we need to ensure our members can afford their repayments, while doing what we can to protect them from falling into negative equity.”
Existing customers will continue to benefit from a five per cent required deposit if they switch deals, providing they do not increase the size of the loan.
Nationwide will also consider applications from existing customers who are moving home, where the loan value is above 85 per cent.
The spike represents a significant hike in the amount that first time buyers will now have to save to buy the average home.
The lender said it will keep the decision “under review”, adding that it hopes to return to normal lending levels in the near future.
A survey from the Royal Institution of Chartered Surveyors (Rics) released last month showed that 32 per cent of estate agents reported a plunge in property prices in May — marking the lowest gauge of UK house prices since 2010.
However Rics forecast house prices to gain momentum again over the next 12 months, as new buyer enquiries recovered from a record low of minus 94 per cent in April to minus five per cent last month.