Nationwide announced today it had raised the minimum deposit required to take advantage of its best deals from 10% to 25%, charging an extra 0.2% interest on anyone who didn’t make the grade.
With the average first time home costing £165,000 FTBs will now have to save at least £41,250 if they hope to avoid being penalised by Nationwide
Fixed rate mortgages: compare and apply
Credit crunch to blame
Nationwide’s decision is the latest in a series of clampdowns as nervous lenders struggle under weight of the credit crunch. Six providers have pulled their 125% mortgages – a popular choice for many cash-strapped FTBs – in the last week alone, while 100% loans are fast drying up as well.
The tighter lending conditions have left many potential homebuyers frustrated at being unable to take advantage of the first dip in house prices seen for many years. According to residential property specialist Hometrack, prices fell for the fifth consecutive month in February, with the average home now costing £174,400.
Discount mortgages: find a top deal
Fixed rate deals still top
For those able to make the step onto the property ladder, fixed rate mortgage deals remain the most popular option – despite the recent cuts in the base rate. A survey by the Fairinvestment website found that 57% of the respondents would choose a fix, short-term deals proving marginally more popular.
Tracker mortgages were second on the list, favoured by 23% respondents, while just 9% would opt for a discounted mortgage, and 3% for a stepped deal.
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