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Nationwide woes first-time buyers despite LTV slash

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by Gill Montia

Nationwide is promoting its mortgages as a “best buy” for first-time buyers, despite having decreased its maximum loan-to-value (LTV) ratio on its fixed-rate and tracker mortgages, from 90% to 75%.

The move left first-time buyer applicants needing to raise a deposit of at least 25% to secure the best rates.

However, the building society is now reassuring first-time buyers that it can still offer a good deal to those with small deposits.

Matthew Carter, director of mortgages at Nationwide, says: “Customers should be aware that the headline interest rate is not all they pay and must also take into account the fees and charges that form part of their mortgage deal.”

First-time buyers opting for a Nationwide two-year fixed-rate £150,000 mortgage, with an LTV of 90%, will pay a rate of 6.45% and a reservation fee of £499.

This compares poorly with the Post Office’s three-year fix with a recently reduced interest rate of 5.34% and a fee of £399.

Katie Tucker, product manager at mortgage broker, John Charcol, says: “There are lenders still offering 100% and 95% mortgages, for now, and borrowers should seek advice from a whole-of-market mortgage broker very soon if they want one.”

However, she expects variable rates to offer best value for many people because further cuts to the base rate should occur this year.

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News posted: February 28, 2008

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