New Nationwide mortgage 'does not signal return to irresponsible lending'

Date:Tuesday 14th July 2009
Author: Max Freedman

A new mortgage offering from Nationwide which allows homeowners to get loans worth 125 per cent of their properties does not signal a return to irresponsible lending, it has been claimed.

Earlier this month, the building society announced the launch of the home loan, which is available to a small number of its existing customers who have found that their flats or houses have fallen into negative equity.

Responding to the development, Paul Holmes, chief executive officer of Firstrung, said: "The 125 per cent mortgage product, even in its halcyon days, only occupied half a per cent of the mortgage market. It caused no damage."

He added that the product is not being offered to first-time buyers.

Nationwide is seeking to find a way for its existing customers to be able to stay with the firm on low mortgage rates, Mr Holmes suggested.

This prevents the need for the lender to send "threatening letters" or for the property owners to leave their homes, he concluded.