Woolwich now demands a 10% deposit from all new borrowers. Logo courtesy of Woolwich.

Woolwich, the mortgage arm of Barclays Bank, has joined the raft of big lenders now asking for at least a 10% deposit from all new borrowers.

Over the past months, the mortgage market has increasingly suffered from the credit crunch, causing many lenders to withdraw their best deals and restrict lending. This is despite the recent move by the Bank of England to pump £50 billion into the borrowing system to free up the market.

A spokesperson from Woolwich told ICM: “The latest surveys are showing that the market is constantly changing and we feel that it is prudent and sensible to limit the maximum loan to value (LTV) available to 90%. This is both from a lender and a borrower’s point of view – we don’t want people to lose equity. For first-time buyers, the best thing to do is save for a good deposit.”

The Woolwich’s decision affects the three deals it still offered with a 5% deposit - a lifetime tracker, a five-year fixed mortgage and loans on its standard variable rate. It has never in fact offered more than a 95% loan, unlike some other lenders who until earlier this year offered up to 125%.

Last week, the Nationwide imposed a minimum 10% deposit on all but two of its mortgage deals, and others with similar policies are the Co-op bank, Cheltenham & Gloucester, Alliance & Leicester and the Britannia building society.

Consequently, deals which require a 5% deposit are becoming harder to find and deposits of 10%, or even 15%, may soon become standard.