Homebuyers told to pay 25% deposit or penal interest rate

Nationwide will tell homebuyers today that unless they have a deposit of 25% or more of the value of a property they will face higher mortgage rates, in the latest illustration of the clampdown on lending caused by the credit crunch.

The move will be a blow for first-time buyers struggling to save for a deposit and comes amid the virtual disappearance of high loan-to-value mortgages. The credit crunch is already slowing the housing market. The Hometrack survey out today shows that prices fell for the fifth month in a row during February.

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