Nationwide asks for larger deposits from borrowers
The Nationwide Building Society recently joined a number of other lenders who have decided to try and recoup the losses incurred by the global credit crunch by asking for a larger deposit from mortgage borrowers. In the past some consumers were able to avoid paying a deposit by taking out a 100% mortgage, and in some cases could even borrow more than the value of the property by taking a 125% mortgage.
However, over recent months both 125% and 100% mortgages have been taken off the market, and an increasing number of lenders are even restricting access to the traditional 95% mortgage by demanding a higher deposit from borrowers. The Nationwide has recently stated that it will want at least a 10% deposit from borrowers on all but two of its products, and this could pose a real problem for some borrowers, particularly first time buyers with little in the way of savings.
An official from the building society stated: “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.” Industry official said that moves such as this were making things tough for consumers, with one official stating: “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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