Homeowners will now have to pay a deposit of 25% of a property's value if they want to qualify for the best rate at one of the UK's biggest mortgage lenders, it has emerged.

Nationwide Building Society has lowered the maximum loan to value (LTV) ratio people need to qualify for its best 5.85% deal from 90% of a home's value to 75%, blaming the recent credit crunch.

The move means someone buying an average priced home of £197,244 will now have to find a deposit of £49,311 rather than one of £19,724, or face paying 0.2% more for their mortgage.

A Nationwide spokeswoman said: "The cost of funding in the market is higher and the housing market is cooling.

"Like a lot of lenders we have to adapt to these changes. It's to do with the market conditions at the moment."

The move covers both the group's fixed-rate mortgages and its tracker deals, and will apply to anyone taking out a new home loan with it.

Louise Cuming, head of mortgages at moneysupermarket.com, said: "It's part of a wider trend we are seeing. Lenders are bringing down the LTVs that you need to qualify for the best deals.

"Originally it went from 95% to 90%. Northern Rock was the first one to bring the bar down to 75%.

"My guess is that it will be a growing trend now as lenders fight for the best profile customers."

The move comes after rival lender Birmingham Midshires Solutions pulled the last remaining 125% mortgage deal from the market.

The firm has axed the product because it is trying to tighten its lending criteria in the wake of the credit crunch.

The group had been the only provider left in the sector after Alliance & Leicester, Abbey, Northern Rock, Coventry Building Society and Godiva Mortgages all ended their promotions recently.

Firms are trying to concentrate on less risky products as they are worried property prices could fall, leaving new homebuyers with increasing levels of negative equity.

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