Nationwide offers 90% mortgages to new buyers

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Nationwide will reduce the minimum deposit required for first time buyers to 10% effective July 20.

Britain’s largest construction company cut mortgage lending in June in response to the coronavirus crisis.

But Henry Jordan, director of mortgage lending, said, “We think it’s a good time to improve our loans.”

It follows the government’s announcement of temporary stamp duty leave for people in England and Northern Ireland.

Homebuyers will not pay stamp duty on the first £ 500,000 of their purchase as part of the tax break, which will last until March 31.

Amid signs of a recovery in the UK housing market, Nationwide will offer an unlimited number of 90% mortgages to new buyers.

Since June, only customers with a 15% deposit have been able to apply for a mortgage from the company.

So, for example, if a property costs £ 100,000, a new buyer would now need a £ 10,000 deposit instead of a £ 15,000 deposit.

“Breathe Life” in the Market

Henry Jordan, director of mortgage loans at the Nationwide Building Society, said: “New buyers are essential to bringing the housing market and the economy to life. We understand that one of the biggest hurdles to homeownership is raising a deposit. ”

He added, “While we will continue to monitor the market closely, we believe this is a good time to improve our loans, initially to those looking for their first home. We welcome the government’s announcement on stamp duty and hope that our combined changes will have a positive impact on a market which, despite relatively good health, is still recovering. ”

The proposed new mortgages will only be available for the purchase of homes that are at least two years old. The maximum mortgage term will be 25 years.

  • UK house prices “first annual decline in eight years”
  • Stamp duty leave: how will it work?

The choice of low deposit mortgages was particularly affected during the coronavirus crisis.

In March, 779 mortgage transactions were completed for borrowers with a 10% deposit. As of early July, there were only 70 products available, according to analysis of the financial news site moneyfacts.co.uk.

Miles Shipside, commercial director of Rightmove, seemed optimistic about the recovery of the housing market in the coming months.

“There has been a record demand for real estate on Rightmove since the reopening of the market, which was further boosted by the announcement of the stamp duty, which should help activity levels in the coming months”, did he declare.

According to Nationwide, UK house prices were 0.1% lower in June compared with the same month a year ago – the first annual decline since December 2012.

Sales plummeted and viewing stopped when the area was frozen under lockdown.

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