Financial Markets – UK Mortgage market goes into lockdown
UK Mortgage market goes into lockdown
Rents and asking prices across the UK are falling and you may be tempted to move on the lower markets to take out a mortgage, something you may find a lot more difficult than you thought. Nationwide, one of the UK’s biggest lenders, effectively pulled out of all new deals.
Other lenders appear to also be following the same path as the home mortgage market goes into effective lockdown amid the coronavirus which has brought the global economy crashing down.
Nationwide will now only offer home loans to those with 25% existing home equity or more.
It rules out first-time borrowers or existing homeowners with little equity in their home.
Nationwide said the change will not impact existing applications.
Nationwide added that the change will allow them to: “focus on supporting existing mortgage members, while continuing to process ongoing applications”, it said.
Existing mortgage customers will still be offered mortgage deals of up to 95% loan to value (LTV), it added.
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%.
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