Cheltenham Gloucester joins lenders’ retreat from no-deposit mortgages

Cheltenham Gloucester will tell homebuyers today that they must put down a minimum deposit of 10% if they want one of its mortgages, as the clampdown on lending gathers pace. Meanwhile, Royal Bank of Scotland and NatWest are withdrawing from offering mortgages for more than 95% of a property’s value. C G - owned by Lloyds TSB - is one of the biggest mortgage providers to rein in its lending in response to the credit crunch.

The change means that a typical first-time buyer in London will have to stump up almost ВЈ25,000 to obtain one of the company’s home loans. RBS/NatWest has already pulled out of offering mortgages above 95% through brokers; after March 7 this will also apply to branch-based home loan applications. On Monday it emerged that Nationwide was insisting on a deposit of at least 25% if borrowers want access to its best rates, though its minimum deposit requirement is unchanged at 5%.

In the past few days all six lenders in the 125% mortgage market - which offered first-time buyers the chance to borrow more than the value of their new homes - have withdrawn their products. Until last night, C G was prepared in some cases to lend up to 100% of the value of a property; from today it will lend up to 90%. The Lloyds TSB mortgage brand has cut its maximum loan-to-value from 100% to 95%.

A spokeswoman said the vast majority of the lending by Lloyds TSB was to the bank’s own customers, and it therefore has a more complete picture of their financial affairs. She said it had always taken a prudent approach to lending and had never been a major player in the high-loan-to-value market.