The Nationwide Building Society is among a growing number of lenders slashing its interest-only maximum loan to value for residential lending. In March the mainstream lender reduced its maximum LTV for interest only loans from 75% to 50%.
Martyn Dyson, head of mortgages at Nationwide, says:
“A number of major lenders have recently restricted their criteria for interest-only mortgages and Nationwide needs to be able to manage application levels in a prudent and sustainable manner.
Many industry commentators are predicting that this is further evidence that Interest Only products will be withdrawn completely from mainstream lending.
Coventry Building Society Also Reduces Maximum Loan to Values
Quickly after the Nationwide announcement the Coventry Building Society followed suit by cutting its maximum LTV for interest-only lending from 75% to 50%.
The Coventry stated:
“Following moves by a number of other lenders to restrict their criteria for interest-only lending the Coventry has also reduced the maximum LTV to 50% where any aspect of the loan is interest-only.
And Then Skipton Building Society Followed Suit
Skipton BS then announced that from march 27th they would be cutting their max LTV on Interest Only mortgages to 60%. They say that for applications up to 80% LTV, a maximum of 60% LTV can be taken on interest-only but the remaining 20% must be taken on capital and interest basis.
At the same time the Skipton also withdrew their 95% LTV products. Skipton states:
“Since the start of this year we have seen quite an uptake of applications for 95 per cent LTV loans, so as a result what we have set aside for them has been over subscribed and we have decided to pull out of them for the time being.”
Leeds Building Society Also Reduces Maximum LTV for Interest Only Loans
Leeds Building Society has cut its maximum loan-to-value for interest-only lending from 75% to 50%. The building society cut its maximum LTV for interest-only loans where the repayment strategy is the sale of the property from 70% to 50%.
And Finally, Santander
Santander has cut its maximum loan-to-value for interest-only lending from 75 per cent to 50 per cent and tightened its interest-only criteria. They will no longer accept the sale of a second property or cash savings as repayment vehicles.