Nationwide Launch Controversial Loan Deal

Fri, 10 Jul 2009

Nationwide has begun offering home loans with 125 per cent loan to value ratios to existing customers in negative equity who need to move house . The controversial deal is likely to attract criticism given that it signifies a return to the excessive loan to value ratios which contributed to the sub-prime crisis, and the loans are being offered to those already unable to clear their debts .

Following the credit crunch, lenders have restricted the amount they are willing to lend to up to 85 per cent of a property’s value, with the best interest rates available to those seeking a lesser proportion of their property’s value, and to those able to provide chunky deposits.

Nationwide’s loans to such customers will be accompanied by a fixed interest rate of 6.73 per cent for three years, or 7.48 per cent for five years, on 95 per cent of the property’s value. Those wishing to obtain as much as another 30 per cent, would see rates rise to 7.23 per cent for three years and 7.98 for five years.

The loans will help Nationwide’s existing customers to finance a move, though Britain’s third biggest lender emphasized that the deals weren’t available to new customers or those seeking to remortgage .
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