Nationwide offers 125% LTV to existing customers

9 July 2009

Existing customers in negative equity are being offered a 95% LTV mortgage, with a rate of 6.73% fixed for three years or 7.48% fixed for five years.

They can then borrow up to an additional 30% with increased rates of 7.23% and 7.98%.

The deal allows customers to carry over any negative equity from their old property to a new home and has been offered by the society since the beginning of June.

A spokeswoman for Nationwide says: “It is a very niche product and there has not been a lot of demand.”

She says Nationwide still carries out the all its normal risk assessments in applicants and that the average LTV on the society’s book is 52%.

Louise Cuming, head of mortgage at moneysupermarket.com welcomes the deal, she says: “Three cheers for Nationwide: at a time when overly restrictive and cautious lending practices are holding the housing market back, Nationwide’s flexible approach is to be welcomed.

“Its new 125% product will help its customers already in negative equity but who need to move house. As Nationwide already has a relationship with these customers and visibility of their payment history they can ensure that they are extending these loans responsibly. And the truth of the matter is if the customer is in negative equity they already have a mortgage of greater than 100% before Nationwide enables the customer to move house.

“Whilst we’ve been aware that some other lenders have been offering similar deals to Nationwide “under the counter”, Nationwide is the first to promote it. Nationwide’s move may force others to follow suit and apply similar creative thinking to help un-clog the housing market.”

The news comes as the Council of Mortgage Lenders revealed lending criteria stopped tightening in May.

Data from the CML shows the average first-time buyer deposit has held at 25%, the same level it has been since February.