17 hours ago

Britain's biggest building society has launched a 125% mortgage.

Nationwide said the "very niche" product was aimed at homeowners trapped in negative equity who were keen to move house.

It is being offered only to the firm's existing mortgage customers whose house value is less than the mortgage on the property, but who are looking to move home and borrow more.

The product's availability comes despite the much tighter lending criteria introduced by virtually all lenders in the wake of the credit crunch.

Nationwide said that its existing customers in negative equity would be offered its 95% loan-to-value deals, with rates of 6.73% fixed for three years or 7.48% fixed for five years.

The interest rates for the additional borrowing, up to another 30% - rise to 7.23% and 7.98% respectively.

A Nationwide spokeswoman said the new deal had been available since early June.

She told The Guardian: "It is a very niche offer. All we are doing is allowing them to carry across the negative equity they already have.

"It's not about additional borrowing or additional risk. The maximum borrowing we would consider is 125% overall, but that doesn't mean someone can automatically get that. We would go through our normal procedures, looking at income, outgoings and so on."

Mortgages worth up to 125% of house values were offered by doomed lender Northern Rock before it was rescued by the Bank of England in 2007.

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