Nationwide said the move was in response to changes made by other lenders and takes effect from tomorrow.
Martyn Dyson, head of mortgages at Nationwide, said: “A number of major lenders have recently restricted their criteria for interest only mortgages and Nationwide needs to be able to manage application levels in a prudent and sustainable manner. The group is therefore amending its policy to a maximum of 50% LTV.”
Adrian Knott, director of independent mortgage broker Adrian Knott Partnership, said: "The Nationwide's decision is another hammer blow to borrowers and the broader property market.
"What this decision demonstrates above all is the herd mentality of the high street lenders.
"Why lenders can't assess applications on a case-by-case basis rather than take an axe to LTVs is beyond me.
"For many of my clients — those with a history of bonuses or high incomes —interest-only loans are the most appropriate product, but LTV revisions like this are leaving them high and dry.
"The net effect of all this is that sales and purchases that should take place don't take place. As a result, the property market suffers even more."
