Mortgages  

Half of homebuyers want 100% LTV

Half of homebuyers want 100% LTV

Half of homebuyers would welcome a return to 100 per cent mortgages, according to research by mortgage lender and broker Ocean Finance.

These mortgages disappeared as part of a major overhaul of the financial market that led to the Mortgage Market Review being introduced in April 2014.

But the survey of 2,000 people found that half of those who plan to buy a home within the next two years are in favour of a relaxation of the lending criteria including 100 per cent LTV mortgages, with those aged 25 to 34 most keen.

Gareth Shilton, of Ocean Finance, said: “The MMR states that lenders must ensure buyers can afford a mortgage. So it’s frustrating for those buyers who are able to prove they can afford a mortgage but can’t raise a deposit because of their rent and living costs.

“It would be a brave lender who would be the first to go back into the mass market with 100 per cent LTVs, although others would no doubt follow suit.”

According to data from the PRA, the number of mortgages being written with LTVs of more than 95 per cent have gone down from 6 per cent of the market in the third quarter of 2007 to just 0.3 per cent of the market in the second quarter of 2015.

A spokesman for the CML said: “Borrowing at this level has, if anything, become even less common over the past 18 months or so.

“A broad range of factors – consumer appetite, lender caution, the impact of regulation, capital requirements, government support schemes and trends in property values – will all have had an impact on borrowing at more than 95 per cent of the property’s values.

“These factors still prevail, so we do not expect to see any significant change in borrowing at this level in the foreseeable future.”

Adviser view

Daniel Bailey, a mortgage adviser with Derbyshire-based Middleton Finance, said: “The majority of first-time buyers are aware they have to save for a deposit, and attitudes have changed over the past five years.

“I would not welcome the return of the 100 per cent mortgage because we would be relying on house prices going up.”