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Nationwide Suspends Lending For Certain Properties At Risk Of Flooding


Britain’s largest building society has halted the issuance of mortgages for certain properties deemed to be at high risk of flooding, though it clarified that this impacts only a small fraction of homes.

According to Rob Stevens, Nationwide’s head of property risk, the lender employs mapping technology to identify properties vulnerable to flooding and refrains from granting mortgages for those deemed to have a high risk.

His remarks during an interview with Bloomberg may reignite discussions about the future landscape post the UK government’s subsidized flood insurance scheme, set to expire in 15 years. Recent reports revealed that weather-related home insurance claims in the UK had surged to a new record, with flooding contributing to half of last year’s £573m total bill.

While some major mortgage lenders like Barclays and NatWest have previously indicated their willingness to provide mortgages for properties at high flood risk, on the condition of adequate home insurance, former Barclays CEO cautioned about the need for further evaluation, especially post the end of the official Flood Re scheme in 2039. HSBC emphasized the importance of extending Flood Re.

However, Nationwide maintains its stance to lend on properties designated as flood risks, ensuring all checks are completed before making an offer to inform borrowers upfront.

Nationwide emphasized its responsibility to lend prudently, leading to limitations on mortgages for certain properties, albeit in a very limited number when it comes to flooding.

Stevens, as reported by Bloomberg, highlighted the significance of disclosing fundamental changes to customers, illustrating cases where he personally notified buyers of their prospective homes’ high flood risk.

Nevertheless, Stevens clarified to the Guardian that the majority of cases still receive lending consideration, contingent upon the implementation of mitigating measures such as flood defenses.

Nationwide refrained from disclosing the exact number of affected homes, stating lending restrictions would only arise if borrowers couldn’t secure home insurance.

In contrast, NatWest confirmed last year to MPs that it doesn’t exclude lending in flood-risk areas.

Last year’s surge in weather-related home insurance claims was fueled by successive storms, including Babet, Ciaran, and Debi. Residents in high-risk flood areas might access insurance through Flood Re, a government-insurer initiative aiming to offer subsidized insurance to households at the highest flood risk to ensure affordability.

Barclays’ disclosed data from February revealed that a vast majority of its UK mortgage portfolio comprises properties in negligible to low flood-risk bands, with a small percentage falling into moderate to very high-risk bands.

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