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Simon Lambert, This is Money

Britain’s biggest mortgage lender has raised its mortgage rates for those without a 25% deposit - hitting almost a third of potential new customers.

Halifax’s move follows rival Nationwide Building Society’s similar decision to add a premium to its mortgage rates for those who need to borrow more than 75% of a home’s value.

Borrowers seeking Halifax’s best mortgages will see a hike in the minimum deposit needed to secure the loan.

Those looking for the best Halifax mortgage on the average home, valued at £196,500 by the bank’s index, will now need to find at least a £49,125, compared to £19,650 previously.

The bank has introduced three tiers of mortgage pricing – below 75% loan-to-value, 75% to 90% loan-to-value and 90 to 95% loan-to-value.

Halifax previously had just two mortgage tiers, with different rates for loan-to-value ratios of up to 90% and between 90% and 97%.

It will also no longer be offering loans through brokers to people wanting to borrow 97% of their home’s value, but these deals will still be available in branches at 0.35% more than now.

The changes come into force on Monday and also apply to Bank of Scotland and Intelligent Finance.

Those borrowing less than 75% will see rates around 0.1% lower than previously, while those borrowing more than this will see rates rise by around 0.14% up to 90% and more above this level.

Halifax’s move comes as lenders have axed thousands of mortgage products in recent weeks and tightened lending criteria.

Nationwide announced it was introducing a minimum 25% deposit for its best rates at the end of February, while other big name lenders are rumoured to be considering similar moves.

Halifax said its decision would benefit its borrowers as approximately 70% of its new mortgage customers put down a deposit of more than 25%.

However, due to its position as the UK’s biggest mortgage provider, the bank will also increase its margins for many borrowers.

Halifax’s parent group HBOS said earlier this week that it could be forced to slash the value of its US mortgage investments again – increasing losses from the sub-prime crisis.

Finance chief Mike Ellis said the ’significant deterioration in financial markets’ since the start of 2008 means further writedowns, were highly likely. HBOS took a £227m hit to last year’s results due to its sub-prime investments.