At last one of the leading UK mortgage lenders has shown some sense, by telling house-buyers in London that they must raise a deposit of at least 25% or be penalised with higher interest rates.
The minimum deposit required by Nationwide building society to secure their best rates has risen to a sensible 25% up from just 10%. The move comes as lenders tighten lending conditions in the aftermath of the credit crunch.
High loan-to-value mortgages have all but disappeared while the number of people defaulting on their mortgages is rising steadily. The move by Nationwide will mean that borrowers who cannot raise the 25% deposit, may still be able to obtain a mortgage but at .02% above the normal interest rate.
Other lenders are set to follow the example of Nationwide as banks start chasing margins rather than market share.
The clampdown comes amid deepening gloom over the housing market. Property information specialist Hometrack today said house prices fell for a fifth consecutive month in February.
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