Abbey and Nationwide's latest borrowing restrictions

Commenting on Abbey and Nationwide's latest borrowing restrictions, Louise Cuming, head of mortgages at moneysupermarket.com, said: "Despite the Bank of England shoring up the mortgage market with an injection of £50bn, these announcements from Abbey and Nationwide show there is no limit to the amount of bad tidings homeowners can receive.

"From Wednesday, Abbey will significantly reduce the maximum amount it will lend to borrowers on an interest-only basis. Borrowers with a linked repayment vehicle such as an ISA will find themselves only able to get up to 75 per cent of the value of their property. Other interest-only householders will only be able to borrow up to 50 per cent.

"This comes amid a growing concern that too many interest-only mortgages are being taken out as a way of reducing payments, without much thought being given to how the mortgage will eventually be repaid.

"Nationwide has tightened the noose at both ends of the spectrum. Not only has it shut the door to intermediary customers who don't have a deposit of at least 10 per cent, but it has also imposed a maximum lending limit of £500,000. It shows the credit freeze is spreading further up the rungs of the housing ladder."