One of the UK's biggest mortgage lenders, Nationwide, has tightened its rules on gifted deposits from family, affecting first-time buyers relying on the 'bank of mum and dad'. The change means that for mortgages with a 10% deposit, buyers must prove they saved at least 75% of that deposit themselves. This temporary measure comes amid economic uncertainty, the lender said.
27-year-old Cordelia Clark from Scarborough had reached the maximum loan she could get for a house up to £130,000. When her parents offered to increase her deposit to help secure a purchase, Nationwide's new rules blocked that option. She expressed frustration, noting that parental support is a normal part of life.
The decision reduces the number of mortgage deals available to first-time buyers with small deposits. Some brokers report that deals for those with 10% or less have fallen by more than half. Nationwide, which recently lowered its minimum deposit from 20% to 10% in July, said the move is a cautious step to protect borrowers and itself during uncertain market conditions.
Property expert Topsy Taiwo suggests the change may prompt young buyers to reconsider their search criteria, such as exploring new areas or taking advantage of the stamp duty holiday. While other banks have not yet followed suit, the impact on first-time buyers could be significant as they navigate a challenging housing market.
