Nationwide and The Mortgage Works will cap their maximum loan-to-value for residential interest-only mortgages at 75 per cent.
From April 6, all applications which exceed 75 per cent LTV will be considered on a repayment basis only. Currently, the lenders’ maximum LTV for interest-only lending is 85 per cent.
Buy-to-let mortgages from TMW, a subsidiary of Nationwide, are unaffected.
A spokesman says: “What we are doing is bringing our criteria in line with the rest of the market.”
Last month, Lloyds Banking Group restricted interest-only lending to 75 per cent LTV for its Halifax brand.
A number of lenders, including NatWest Intermediary Solutions, Lloyds, Northern Rock, Coventry Building Society and Woolwich, have made changes to their interest-only lending criteria in the past year.