The lender has made the move over dears of a house price crash which will leave homeowners with negative equity in their homes.

Nationwide said it would not accept new borrowers who had less than a 15% deposit. The building society is the first big lender to warn customers about the dangers of negative equity, in which a homeowner’s mortgage is greater than the value of their property.

The minimum deposit increase arrives just two days after Nationwide was reported to have offered around 200 redundancy packages to its staff.

The building societies pointed to the current uncertainty which is plaguing the UK property market since the lockdown restrictions were introduced on March 23.

Henry Jordan, director of mortgages, said: “The outlook for the mortgage market and house prices remains uncertain. As a responsible lender, we must factor this uncertainty into our lending assessments.

“Our priority… must be to help members keep their homes. As such, we need to ensure that our members can afford their repayments, while doing what we can to protect them from falling into negative equity.”

Despite the gradual reopening of the UK housing market, lenders have remained cautious about granting new mortgages.

Many have also said that a backlog of work for surveyors has made it even more difficult for them to value properties.

Last week, Virgin Money, Clydesdale Bank and Accord all withdrew their 10% deposit mortgage deals for purchase, remortgage and new builds, The Times reports. 

Banks and building societies have been extra cautious due to the mass use of mortgage holidays across the UK.

UK Finance figures released last month revealed that 1.82 million mortgage payment holidays have been issued in the UK as of May 20. With 200,000 RBS customers taking mortgage repayment holidays. 

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