Funds dry up
Home buyers hit as lenders withdraw mortgage products
Lenders are facing a funding issue
Nationwide is temporarily reducing mortgage offers for low-deposit borrowers including first-time buyers as lenders face a growing squeeze on available funds.
The building society said that from Tuesday it would pull all fixed-rate and tracker mortgages above 75% loan-to-value from sale for remortgage, first-time buyers, and new house purchases.
The UK’s second largest mortgage lender, said it will focus on supporting existing borrowers and processing ongoing applications during the crisis, and said it had experienced an “extremely high” number of inquiries from these groups.
Nationwide is the latest lender to pull mortgage products from the market.
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%.
Lenders’ customer service teams have also been inundated with requests for mortgage holidays after the government promised mortgage support for homeowners affected by the virus.
Sara Bennison, who is responsible for Nationwide’s products and propositions, said the building society needed “to maintain the levels of service expected of us in the face of an extremely high number of enquiries about existing mortgages and ongoing applications”.
“That is why we have taken this decision on a temporary basis,” she continued. Bennison said that continuing to offer home loans up to 75 per cent LTV meant Nationwide could “continue supporting the housing market.
“We continue to monitor for any updates to government advice and, in this ever-evolving situation, we ask members and brokers to bear with us and thank them for their patience.”