Nationwide announce house price drop
The Nationwide building society has announced that house prices have dropped by 2.5% this May; this has been the greatest monthly drop since 1991.
Nationwide suggested that borrowers today were placing down larger deposits. Over 31% of homeowners opted for a 90% loan-to-value loan, whilst in the 1980s 44% aimed for a high LTV mortgage deal.
After analysing today’s current market status, only 30 per cent of home owners took on interest-only loans compared with 1988, when around 85 per cent were interest-only mortgages, enabling borrowers with smaller equity within their homes.
A small amount of borrowers purchased towards the top of the market than in the 1980s, Nationwide commented.
Further changes on lending from major banks and building societies has made it more difficult for borrowers to obtain a high LTV mortgage, Nationwide explains.
Fionnuala Earley, chief economist at Nationwide commented:’ While this is frustrating for those in that position, more stringent underwriting criteria should ultimately lead to fewer overstretched borrowers and hence a more stable and sustainable market.’
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