Have you been thinking about getting a mortgage? You’re going to need to think again as lenders are scrapping their home loan deals.
On Tuesday, Nationwide – one of the UK’s biggest lenders – effectively pulled out of new deals.
Others are doing the same as the home mortgage market goes into lockdown amid the coronavirus which has brought the economy to a virtual standstill.
Nationwide will now only offer home loans to those with 25% equity or more.
It rules out first-time borrowers or existing homeowners with little equity in their home.
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Nationwide said the change will not impact existing applications.
In fact it will allow it to “focus on supporting existing mortgage members, while continuing to process ongoing applications”, it said.
What are lenders doing?
Nationwide blamed “an extremely high number of inquiries about existing mortgages and ongoing applications”.
“That is why we have taken this decision on a temporary basis although, by continuing to offer home loans up to 75% LTV [loan to value], we can continue supporting the housing market,” it said.
Other lenders that have taken similar action include Santander and Skipton Building Society but many have gone further, by reducing the loan-to-value ratio to 60%.
That means borrowers will need a 40% deposit or equity in their home to be able to get a mortgage.
Lenders that have done this include Barclays, Halifax, Virgin Money and The Family Building Society, while the Coventry Building Society has cut its LTV ratio to 65%.
“With so much uncertainty at the moment, providers seem to initially be focusing on the support that their existing customers may need in the coming weeks.”