Analysis from fairinvestment.co.uk has shown that while overall mortgage enquiry figures for September and October were down, more than three quarters of the enquiries that were received came from first-time buyers who required 100 per cent mortgages.
This is a significant increase in the 57 per cent requiring 100 per cent mortgages in the first quarter of 2007.
James Caldwell, director of fairinvestment.co.uk, said that Britain’s love affair with the property market was far from over: "Our figures suggest that while overall there have been fewer mortgage enquires since the first quarter of 2007, first-time buyers are still keen to seek out a deal and are fully prepared to opt for 100 per cent mortgages if it means getting their own home.”
Undoubtedly, increased competition has helped reduce the interest rates on these types of large mortgage loans, but the concern is that there will eventually be a premium to pay and this is likely to move higher following the credit squeeze.
Already, a number of smaller lenders have taken steps to withdraw products over the last month while rates for others have started to creep up, making those with 100 per cent mortgages vulnerable to price falls as there is no equity to lessen the impact.
Caldwell continued: “With interest rates having risen five times since August 2006 to keep down inflation, slowing the market as a result, buyers are naturally being stretched to their limits. While 100 per cent mortgages may sound like the answer, even just a 5 per cent deposit could provide the homeowner with some peace of mind under the current climate.
“There are still some good deals to be had with many of the major lenders and now is a good time to be shrewd by exploring all the possible choices.”
