The direct-only Save to Buy product will offer first-time buyers a regular savings account paying a rate of 2.5% gross p.a /AER variable on balances up to £20,000.
The account can be opened with £50 and customers have to save a minimum of £50 per month.
Customers have the flexibility of not paying the minimum monthly amount for up to three months during a rolling 12-month period.
For first-time buyers to be eligible to apply for a Nationwide 95% LTV deposit mortgage, they must have been saving in Save to Buy for between six months and three years.
They will then be eligible to apply for mortgages of up to 95% LTV that were previously exclusively available to existing customers moving home.
Martyn Dyson, Nationwide’s head of mortgages, said: “We’ve listened to our customers and we know there is a need for mortgages with a 5% deposit for first-time buyers which aren’t widely available in the market.
“With Save to Buy, they can save a deposit with a competitive interest rate and then have access to a 5% deposit mortgage, meaning their first home could be a closer reality than they might think.”
The account will be available to first-time buyers from 6 May 2011, on a direct only basis.