100 percent mortgages in 2010

First time buyers are set to struggle as we move into 2010 and those looking for 100 percent mortgages are not going to find any in the market.  There are no lenders willing to take the risk on 100 percent mortgages, and the maximum they are willing to risk is a LTV of 95 percent.

Given the fact that the credit crunch was brought about by reckless lending then the removal of these deals makes sense.  100 percent mortgages in a climate where we may still see a collapse in house prices, rising unemployment and uncertainty in the market is absurd.

The current issue for the first time buyer is that property prices for that group rose by 3.9 per cent in November and for those already on the property ladder the prices declined by 0.7 per cent, figures from the latest house price index published by Communities and Local Government show.

Jonathan Moore, director of Easyroommate.co.uk, says: “A lot of first-time buyers missed out on the cheapest house prices because they couldn’t get mortgages, and missed out on the stamp duty holiday as a result.  

“Now it’s becoming trickier for young buyers to get a foot on the property ladder.

“We are yet to see lenders consistently offer first-time buyers realistic loan-to-value mortgages at cheap enough rates.

“This situation is only going to get worse as house prices continue to rise and larger mortgages are needed.”

The only hope for the first time buyer is to build as big a deposit as possible and hope that prices do in fact fall, maybe considerably.  Some borrowers are however taking out loans in order to raise the 5% deposit required for a 95% mortgage, which does in effect create false 100 percent mortgages, but lenders should be looking out for this and protect the borrower from borrowing to such levels.