The statewide building society has returned to the high-lending value mortgage market, cutting the deposits it requires from first-time buyers after announcing a stamp duty vacation last week.
But as a sign that lenders are uncertain about the direction of the housing market, it has capped loans to 90% and introduced new hurdles for potential borrowers.
Society withdrew from the Low deposit mortgage market in mid-June, stated that it wanted to protect borrowers from falling into negative equity. First-time buyers who were able to apply for a loan with just a 5% down payment were told they would now have to pay 15% of the cost of their new home.
episode Announcement of a stamp duty vacation last week In England and Northern Ireland for real estate up to £ 500,000 worth, she said she would reintroduce 90 percent mortgages for first time home buyers from Monday July 20th.
It hoped that the move will help “have a positive impact on a market that is still recovering despite relatively good health”.
However, the mortgages come with a number of conditions. To qualify, potential first-time buyers must buy a home that is at least two years old and not rely on a down payment made in full by the family. They cannot be included on the government’s vacation program and are subject to rigorous affordability checks.
The mortgage loan term is capped at 25 years, eliminating buyers who would need to increase the term of their loan to accommodate the monthly repayments.
In recent years, first-time buyers have increasingly taken out 30 year mortgages to qualify for the borrowing.
Nationwide, lending for apartments is limited to 75% for new buildings and 85% for subsequent buyers.
The company’s strict criteria suggest that lenders are wary of what will happen to the housing market in the coming months. Halifax and Nationwide have both reported declines in recent months, although buyer interest has increased since the market was released.
Last Wednesday’s stamp tax cut, meaning no one buying up to £ 500,000 worth of property will pay the tax and those who make larger purchases will save £ 15,000, which also increases interest.
The company’s mortgage director Henry Jordan announced the return of 90% of first-time buyer loans, saying these borrowers were vital to breathe life into the real estate market and economy.
“We know that one of the biggest hurdles to owning a home is getting bail,” he said. “While we will continue to monitor the market carefully, we believe the time is right to improve our lending, first to those looking for their first home.
“We applaud the government’s stamp duty announcement and hope that our combined changes will have a positive impact on a market that is still recovering in relatively good health.”
David Hollingworth of mortgage broker London & Country said it was “good to see Nationwide getting back to the first-time buyer market so quickly” as there were only a handful of lenders offering 90% credit.
“It looks like they want to support this part of the market from now on, which is important as we’ve seen some other lenders come back and then pull out because they have been flooded,” he added.
Simon Gammon, managing partner of Knight Frank Finance, said anyone looking for a 90 percent mortgage would find the criteria more complex now than they were before.
“Lenders are asking a whole new set of questions and there are new ways to write the loans,” he said.
“It’s really good that another lender has come in with a 90 percent mortgage,” he said. “We’re far from getting 95% mortgages back, which is a shame, but probably a reflection of how lenders think about property prices.”