Santander doubles deposit for interest only mortgages

Santander has doubled the deposit needed to take out one of its interest only mortgages from 25% of a property's value to 50%.

As the second largest mortgage lender in the UK, the bank's decision has implications for the availability of such loans in the future.

David Hollingworth, Associate Director at London & Country Mortgages, said: "Such a radical shift by a major lender will be seen by many as another nail in the coffin of interest only."

In 2011, the proportion of interest only mortgages for first-time buyers stood at 3% - a stark contrast to the 20% five years ago.

Now that the precedent has been set by Santander, it other lenders are likely to follow suit.

Recent research by Rightmove found that first-time buyers are finding it difficult to get onto the property ladder, as those who bought only a few years ago aren't moving further up the ladder.