The building society said its decision followed rules introduced in the Mortgage Credit Directive (MCD), finalised this week, which will require lenders to protect customers against exchange rate risk where loans are in a foreign currency.
The lender said: “Nationwide is making these changes as a result of our regular reviews to ensure consumers are protected, particularly given the scale of a mortgage commitment, and to ensure we are best placed to comply with the spirit of the Mortgage Credit Directive, which comes into force in March 2016.”
Nationwide said foreign currency income may still be considered for existing customers moving home where no new lending is required.
It will not amend the treatment of term variations or changes to repayment type but it explained any foreign currency income must be converted to Sterling by the customer before use.
In its MCD feedback and final rules report, the Financial Conduct Authority said while some consumer and industry stakeholders objected to the changes when responding to its consultation, it explained it did “not have any scope to change the requirements set out in the MCD”.
Respondents had raised concerns that the new rules would cause firms to stop lending on foreign currency income and reduce consumer access rather than stimulate the internal market.
