The lender said that interest-only will continue to be available up to 75% LTV, but will not be offered at all to first-time buyers.
The changes take effect from 28 March and will apply to both its direct and broker channels.
Last week NatWest Intermediary Solutions temporarily suspended its interest-only lending via brokers.
Tomorrow it will introduce two purchase mortgage deals to its corporate range that will be available on an interest-only basis.
The two-year fixed rates are available at 2.89% up to 60% LTV with a £999 fee and 3.29% up to 75% LTV with a £999 fee.
To be eligible for these deals, a borrower must have paid a minimum of the last three months’ salary, of at least £1,000 a month, into an active RBS or NatWest current account.
Borrowers will need to earn a minimum of £50,000 pa gross basic salary, before any regular overtime or bonus income is taken into account.
For joint applications, the main applicant must earn at least £50,000 gross basic salary.
Acceptable repayment vehicles include endowments, pensions and ISAs/PEPs. Enhanced repayment vehicles can be used provided the applicant fulfills additional criteria.
Yesterday, Skipton Building Society announced that it had cut its maximum LTV for all interest-only applications from 75% to 60%, following moves by Nationwide and Coventry, who slashed their maximum interest-only LTVs to 50% last week.