100% Mortgages Disappearing

Not so long ago lenders were dolling out 100% mortgages left, right and centre as a means of giving first time buyers a leg up onto the very expensive property ladder. Unfortunately times have changed and lenders that offer 100% loan to value mortgages are becoming few and far between.

After the sub-prime crash and Northern Rock crisis UK mortgage lenders are taking a much more cautious approach to both the products they offer and who they offer them too. Since October ’07 alone, 10 mortgage lenders have withdrawn their 100% products from the market while, according to moneyfacts.co.uk, 11 lenders have reduced the loan to value ratio available on at least part of their mortgage range in the last 8 months.

Other lenders who still offer a full range of 100% products have become more choosy about who they will lend too, with parental guarantors and young professionals becoming the borrowers of choice.

Over the past few years lenders have been more than willing to lend first timer buyers over and above the complete loan to value cost of their new home provided they could afford the repayments. This is a strategy which has given many individuals the opportunity to purchase a house they would otherwise have be unable to afford.

As a consequence, this recent shift in the market could spell disaster for the first time buyers who have been waiting in the wings for house prices to fall as many will be unable to afford the now necessary deposit.