Nationwide has stopped lending to new borrowers who get paid in a foreign currency.
The lender says it “may” consider income in a foreign currency for existing customers who are looking to move home and where no additional lending is required.
There is no change to the treatment of term variations or changes to repayment type but any foreign currency income must be converted to sterling.
Nationwide says it has made the change due to the new rules around foreign currency loans in the European Commission’s Mortgage Credit Directive. The Directive insists that lenders offer the borrower the opportunity to switch the currency of their loan if their national currency falls or increases in value by 20 per cent in relation to the credit currency. There are also increased disclosure requirements at the offer stage.
A spokeswoman says: ”Nationwide is making these changes as a result of our regular reviews to ensure consumers are protected, particularly given the scale of a mortgage commitment, and to ensure we are best placed to comply with the spirit of the Mortgage Credit Directive, which comes into force in March 2016.”
Coreco director Andrew Montlake says: “It’s a shame because in London we do find a lot of examples where part of the borrower’s bonus is paid in US dollars, for example. Although it won’t affect a large proportion of the market, some people will be affected.”