Nationwide and Abbey tighten the mortgages process |
Nationwide, the UK's biggest building society, and Abbey, the third-biggest lender, announced new rules today that will ease of the borrowers who do not have a deposit of at least 10 per cent of their property's value, after chopping the maximum loan size from 95 per cent to 90 per cent for the majority of deals.
From Thursday, Nationwide will offer loans for 95 per cent only to existing borrowers or people taking out a three-year, fixed-rate mortgage.
From tomorrow, Abbey will have only one deal left for homeowners with 5 per cent equity — a five-year, fixed-rate deal charging 6.99 per cent interest.
The moves are to help buyers who have not saved up a big deposit, but are expected to hit hardest those remortgagers who do not have much equity in their property, as they face the possibility of being universally refused a deal when they reach the end of their current term, and will be forced onto sky-high rates of interest unless they can find extra cash.
Nationwide also announced that it would reject borrowers with £1 million loans, after cutting its maximum loan size from £1 million to £500,000. It will stop new customers who have deposits worth less than 25 per cent taking out a mortgage on its Standard Variable Rate (SVR).
Many borrowers had been taking out the 6.24 per cent SVR because it had become cheaper over recent weeks than some of Nationwide's fixed and tracker-rate deals.
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Added on 28/04/2008 22:42:27
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