Nationwide to restart 90pc loans for first-time buyers
NATIONWIDE has become the first high street brand to restart mortgage lending to first-time buyers with a 10pc deposit, following the Government’s move to boost the housing market.
Britain’s biggest building society restricted its mortgages in June, citing fears that falling house prices could leave high-mortgage borrowers in negative equity. Since then, only customers with 15pc deposits have been able to apply for loans, with many potential first-time buyers locked out of the market. However, Nationwide said the stamp duty tax break introduced last week by Rishi Sunak, the Chancellor, had helped restore confidence in the country’s struggling property sector.
Although most first-time buyers already paid reduced or no stamp duty, Nationwide said the move would improve confidence in the wider market.
This will allow it to resume lending to first-time buyers with a 10pc deposit from July 20.
Last week, Telegraph Money called on banks to support first-time buyers after the stamp duty cut left them facing greater competition for homes but with little access to lending. Nationwide
was one of many banks and building societies to withdraw 5pc and 10pc deposit mortgages in recent months.
HSBC has been the only major brand to offer 90pc mortgages throughout the pandemic, although only limited numbers have been available.
Nationwide said it would have no limit on its lending but that it would continue to monitor market changes.
Following Nationwide’s announcement, Coventry Building Society said it would offer 90pc mortgages on a trial basis today and tomorrow.
Platform, part of the Co-operative Bank, will also offer 90pc loans from tomorrow.
Chris Sykes of Private Finance, a mortgage broker, said that some banks had been reluctant to offer small-deposit loans because of fears they would be overwhelmed with applications.
He added: “With Nationwide being one of the largest lenders for first-time buyers, this is likely to encourage others back into the market.”
However, the business said it would not lend to those buying flats or newbuild houses.
These are typically perceived as most vulnerable to sudden price falls if economic conditions worsen.