UK's biggest building society, Nationwide, triples deposit it will ask for from first-time buyers
The UK's biggest building society has tripled the deposit it will ask for from first-time buyers.
First-time buyers are likely to be the most significantly affected because they often have smaller amounts saved to get on the property ladder.So for example, if a property costs £100,000, a new buyer would now need a £15,000 deposit rather than a £5,000 deposit.Nationwide made the move in case house prices fall and buyers go into negative equity - that is when the debt is greater than the value of the property.
After the elation over the re-opening of the housing market, Nationwide's move to limit how much we can borrow will bring everyone down to earth. You can feel trapped, because if you sell you make a loss. Plus, there is virtually no prospect of getting another loan to move up the ladder. As the housing market has reopened, those maximum loan-to-value ceilings have been rising again, but not up to Nationwide's previous level of 95%.'Hard to borrow'However, there is more demand for that type of mortgage than many banks have the capacity to deal with at the moment, he said.
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