Mortgage seekers got yet more bad news today as two of the UK’s biggest mortgage providers tightened lending. Nationwide and Abbey have both reduced the availability of their mortgages especially when it comes to the loan-to-value of the mortgage with 95% loans going out the window to all but existing customers. New borrowers will be forced to have at least 10% deposit if they are to be granted a deal in the future.

The disappearance of these deal signals a particularly tough time for those who are coming to the end of a fixed rate term and are looking to remortgage but who have little in the way of equity in their property. They may end up being refused almost all mortgages on the market unless they can stump up the extra cash to take their loan value below 90% of the property value. This could mean that, come the end of their current term, they would experience large rate increases making repayments unaffordable.

Nationwide also lowered their maximum loan size from £1 million to £500,000 and stopped customers with less than 25% deposit from taking out one of their standard variable rate mortgages.

For those hoping to switch to an interest-only mortgage the news wasn’t any better as Abbey said they would stop offering this deal to those with equity worth less than 50% of the property value.

The risk now is that other major lenders follow suit and reduce the availability of such mortgages denying the chance for struggling homeowners to cut hundreds off their monthly repayments by switching to interest-only deals.