Mortgages Uncovered

The largest building society in Britain, Nationwide, is officially the first lender to bring back the new 95% mortgage based on the value of a property.

The new deal is a two year fixed mortgage which gives an interest rate between 7.18% — 5.18% above the BofE base rate. Nationwide also offers its customers who have a larger than 40% deposit a very similar two year fixed rate mortgage deal at 5.38% interest.

Divisional Director, Matthew Carter at Nationwide, said:

“As part of our ongoing commitment to existing borrowers during these difficult times, we have introduced a new, higher, loan-to-value (LTV) tier. The new tier will ensure that customers continue to benefit from a range of fixed and tracker mortgage options. The new tier will ensure that customers continue to benefit from a range of fixed and tracker mortgage options.”

The financial website, Moneyfacts’, Darren Cooke said figures show

“how banks and building societies have shifted their focus from rate to risk. Reducing property values are the main culprit, resulting in customers finding themselves in negative equity and banks being over-exposed.”

Chris Eagle, commercial manager at CreditChoices.co.uk said: “The new deals are expensive, and lenders are now pricing for risk. Re-entering the 95% market is a bold move by Nationwide and it will help customers who desperately need to move house but can’t find the finance. It is unfortunate thought that first-time buyers who would benefit most from a 95% mortgage, have been excluded from the offer.”