Nationwide restricts interest-only to 75% LTV
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Nationwide and The Mortgage Works are restricting interest-only mortgages to 75% LTV for residential loans from tomorrow.
The lender currently offers up to 85% LTV on an interest-only basis.
A spokesman for Nationwide says: “The change in criteria will bring the Group’s policy in line with a number of major lenders.”
Buy-to-let mortgages from TMW are unaffected.
Nationwide’s move follows other lenders such as Halifax, which announced last week that it would also be capping interest-only borrowing at 75% LTV.
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Readers' comments (6)
Anon | 5 Apr 2011 4:16 pm
Can someone at the FSA (Who have lets be honest instigated these changes) explain to me what I now do with all of my clents who have interest only investment backed mortgages at 75-90% ltv.? Where do these people re-finance when their deal comes to an end. Thats right they dont because they cant because of your ill thought through changes. Well done, you have yet again stiched up jo public.
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Dermot Brannigan | 5 Apr 2011 4:24 pm
This is happening across loads of lenders now. The FSA are going in and demanding that they have this stipulation.
However, there is nothing in MCOB that dictates this and the MMR hasn't come into effect.
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Anonymous | 5 Apr 2011 5:39 pm
And even better for the client who's interest only mortgage payment is less than having to sell and rent. Could force them out of house ownership altogether
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Anonymous | 5 Apr 2011 5:54 pm
Simple mathematics show this is not TCF. If a customer is to pay interest only and regularly overpay their mortgage by the difference between a repayment mortgage repayment and interest only, they would pay more capital off over say a 2 year deal than they would have done on the same c+i repayment mortgage, as the interest on a repayment mortgage is always weighted to the start and also includes the fees which are paid off from the start. What on earth is difficult to understand this is to the detriment of the consumer and not a benefit or "responsible" lending practice!! If people are paying less capital from their mortgage, then where is the prudent advice!? This is putting them at greater risk of negative equity!!
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colin | 5 Apr 2011 5:57 pm
lenders are running scared of the FSA.
sledge hammer to crack a nut.
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Anonymous | 6 Apr 2011 12:15 pm
With this decision and that of the Halifax last week this instantly puts thousands more borrowers in the mortgage prisoners category who will never be able to move again.
Less housing transactions is bad news for the whole economy from estate agents down to removal men and DIY stores, but no one cares or makes a fuss.
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