With an uncertain mortgage market Nationwide has removed their high loan to value mortgage deals for new buyers, tripling deposits.
Nationwide Building Society has withdrawn their 95% and 90% loan to value mortgage deals for first time buyers, home movers and remortgage buyers with the minimum deposit tripling from 5% to 15% due to Covid-19.
After the housing market was reopened from lockdown mortgage lenders were concerned with the risk of negative equity for borrowers and Nationwide have reduced the maximum loan (LTV) to value to 85%.
The new mortgage deals do not apply to existing remortgage buyers and they can switch to preferential rates offered by the lender.
Deposits triple for new buyers
Changing the maximum LTV from 95% to 85% means deposits for new buyers will increase from £10,945 to £32,835 based on the Nationwide average UK house price index of £218,902.
Earlier in June lenders including Accord Mortgages, Virgin Money and Clydesdale had withdrawn 90% loan to value products following a strong rise in demand.
With the opening of the housing market on 20 May demand for residential mortgages has increased significantly while lenders capacity has decreased due to the lockdown and social distancing.
The priority for Nationwide is to help homeowners keep their property and avoid negative equity as house prices have reduced by -1.7% during May.
Falling house prices could be an opportunity for first time buyers with larger deposits as they can purchase at a lower price or buy a larger property.
However, This month Rightmove have revealed that the asking prices from sellers have increased 1.6% since March with an average house price for a first time buyer rising to £212,528.
Interest rates at all time lows
The number or mortgage products available on the market have reduced with Moneyfacts reporting 95% and 90% LTV two year fixed deals reducing from 431 before the lockdown to only 35 in May.
At the same time the cost of mortgages have reduced further due to lower rates from the Bank of England and lower Swap rates used by banks to borrow money from other banks.
With a 75% LTV two year fixed rate mortgages reduced from an average of 2.29% to 1.97% and five year fixed rates reducing from 2.56% to 2.20% over the last three months.
If you have a large deposit the Nationwide 60% LTV mortgage offers a two year fixed rate at 1.09% with a £1,499 application fee and five year fixed at1.40% with a £999 fee.
For older homeowners the equity release buyer can secure fixed rates from 2.8% with a lifetime mortgage releasing funds to reduce inheritance tax owed by your beneficiaries or purchase a new car.
Lower mortgage rates can benefit buy-to-let investors as they can remortgage to reduce the cost of interest repayments to lenders.
What are your next steps?
Call our LCM mortgage brokers for advice if you are a first time buyer, want to remortgage your existing home for the best mortgage deal, moving home or a buy-to-let investor.
Start with a free mortgage quote or call us and we can take your details. Learn more by using the property value tracker chart, mortgage costs calculator and equity release mortgage calculator.
For equity release buyers our London City Mortgage advisers can recommend lifetime mortgages allowing you to receive cash from your property for home improvements, holidays or even give to a family member.
