Nationwide Building Society is changing the maximum Loan to Value (LTV) amount that it will lend to different borrower types across all of its lending channels.
Due to these unprecedented times and an uncertain mortgage market, the Society says it has taken the prudent decision to reduce the maximum LTV borrowers can access in order to continue lending responsibly.
These changes reflect both the current state of the market and follows similar moves by other lenders, whilst ensuring Nationwide continues to support the post-Covid recovery of the housing market.
The new maximum LTV’s are:
Existing mortgage members – will continue to be able to switch to a new mortgage deal regardless of their LTV providing there is no increase in LTV.
Applications from existing mortgage members moving home that are above 85% LTV will also be considered on a like for like LTV basis.
House purchase, remortgages and first-time buyers – lending available up to a maximum of 85% LTV.
As a responsible lender, Nationwide needs to ensure borrowers can afford mortgage payments and are, as much as possible, protected against the potential for negative equity, should house prices decrease.
Nationwide is also reducing fixed rates at 60% LTV by up to 0.1% for borrowers remortgaging to the Society.
Two-year fixed rates will now start from 1.09% with a £1,499 fee and five-year fixed rates from 1.40% with a £999 fee.
Henry Jordan, Director of Mortgages at Nationwide Building Society, said:
“The outlook for the mortgage market and house prices remains uncertain.
“As a responsible lender we must factor this uncertainty into our lending assessments, which is why we have taken the decision to reduce our maximum LTV for new business.
“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.
“We will continue to keep this situation under review and hope to return to lending at higher LTVs in the near future.”
This is what will damage the housing market the most.
Not a lack of instructions or willing purchasers but lenders being far too cautious.
The bounce back has surprised many and shows no sign of slowing ………unless lenders clog it up again!!!
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credit crunch repeated…
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At the point where the bank of mum and dad aren’t able to help with a 5% deposit because the stock market has contracted and reduced their tax free draw down the lenders are tripling the deposit requirement for first time buyers, that will help ease the housing crisis (not)
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The opportunity for pay back by the banks for UK PLC bailing them out last time is being lost. Woeful.
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My view is that what the Nationwide are saying is that they expect the market to retract/fall by approx 15% and would prefer the consumer to cover any potential shortfall, therefore reducing their own risk to the property market. Great business model isn’t it?
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Thanks heavens someone is being responsible. With even the Bank of England predicting a 16% fall in prices, and many others more, it is heartening to see a lender being sensible. Even a 15% equity tranche is likely to be wiped out. And we can’t trust these starry-eyed kids brought up on Phil & Kirstie and get rich quick BTL youtube seminars to negotiate proper discounts today. So the lenders have to play the grown up. Thank heavens they are or the taxpayer will be bailing them all out again in a couple of years like in 2008.
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A cat must have scattered the pigeons. Natwest have made their cull too this week. The ‘mortgage holiday’ which the Government said would not reflect in credit rating has backfired because anyone who took any or part of this offering are now deemed ‘at risk’.
yes it is the lenders who are inundated putting sharp brakes on. I guess if I held the purse strings and was lending money to an unprecedented number of applications, I too would rid the risk factor.
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I see both sides of this. Whilst the larger lenders clearly don’t want the exposure because there is an inferred recession incoming and the threat of house price reduction, I also see the pent up demand of buyers out there. Post 2008, there was very little demand, and therefore lenders absolutely had to take measures to prevent negative equity situations, and that was proven by the fact that 90% LTV didn’t return until 2011 and 95% LTV didn’t return until 2013 and the launch of the two help to buy schemes for buyers.
This time though, after 3 and a half years of Brexit related uncertainty and now 4 months and counting of COVID, the pent up demand is HUGE! It’s not the buyers that need incentivising though. I said this 2 years ago when the market was supposedly in free fall – Incentivise house sellers, not buyers! Create stock and the demand will come. At the moment I am seeing house prices achieve well in excess of asking prices because there are first time buyers in their droves all looking for the same house with a lack of available stock. There’s no need to print money to help this market out. Give home sellers who simultaneously buy and sell at the same time an incentive to do so (free conveyancing/government pays estate agent fee/stamp duty relief for movers etc etc). Stock increases, demand is satisfied, market stays stable. SImples. I’m surprised the government have not turned to sellers to stimulate the market before now, but its needed more than ever!
(In the humble opinion of me of course (-:)
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The papal infallibility of the Bank of England ( what was it predicting would result from Brexit) amuses me
It is natural for NBS to fear the worst but is not the case that decisions like this just self perpetuate the thing that one fears ?
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