Nationwide wants bigger deposits

Nationwide has joined many rivals in tightening lending criteria

The UK's second-biggest mortgage lender, Nationwide, is demanding bigger deposits from new borrowers on nearly all of its products.

New customers will need to find a deposit of at least 10% of a property's value for all but two fixed rate and tracker deals.

The changes, taking effect on 1 May, also sees a variable rate deal for new customers requiring a 25% deposit.

The Nationwide joins other lenders in tightening the criteria of deals.

'Controlled and prudent'

The lender said it would no longer offer new customers loans of more than £500,000.

Existing Nationwide borrowers will not be affected by the changes and will continue to have access to all products with a deposit of at least 5% of the property's value.

"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," said Matthew Carter, Nationwide's divisional director for mortgages.

He added that they were assisting first time buyers by offering discounts on some fees.

These were connected to some new three-year fixed rate or three-year tracker deals, which were the only products still available offering mortgages valued at 95% of the property's value.

Industry changes

The Nationwide joins a number of lenders in making it more difficult to get a mortgage with a small deposit.

It is frankly impossible to see how those with limited savings will find a way to get a foothold on the property ladder Sean Gardner, Moneyexpert.com

In recent months, so-called 125% mortgages disappeared from the market, quickly followed by 110% and 100% deals.

"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," said Sean Gardner, of Moneyexpert.com.

He claimed that people remortgaging would now need a deposit of 15.5% to take out a fixed or variable mortgage.

"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," he added.

Credit squeeze

Three falls in the Bank of England's base rate since December means that customers whose mortgages deals are directly linked to this rate have benefited from cheaper loans.

But last week, other big mortgage lenders - the Abbey, Cheltenham and Gloucester, and Britannia - announced another round of price rises for new customers on other deals.

They had revamped their mortgage ranges a number of times already this year.

Financial information service Moneyfacts said it was not mortgage-holders who were facing higher prices. Rates and monthly repayments on personal loans were also rising.

"Since the beginning of the year more than half of lenders offering personal loans have made changes to their rates," said analyst Michelle Slade.