MAB reported a growth in 100 per cent LTV plus products for 2005, with a 4 per cent increase from 2004’s total of 8 per cent, up to 12 per cent. Lending on 100 per cent products peaked in quarter three, coinciding with a Bank of England rate reduction in August.
Despite an uptake in consumers opting for 100 per cent products, Brian Murphy, lending manager at MAB, urged borrowers to secure a deposit wherever possible. He said: “I feel that these levels are as much a result of increased marketing by the lenders of 100 – 125 per cent products, as due to the rise in house prices. Buyers should, wherever possible, try to raise a deposit and only consider a 100 per cent mortgage where it is absolutely necessary.”
However Murphy admitted this product range appealed to first-time buyers eager to step onto the property ladder. “The advantage that these products bring to first-time buyers is a combination of attractive rates, greater borrowing potential for those customers who meet the criteria, the ability to make home improvements, furnish the property and meet the costs of moving without the need for a deposit,” he added.
However Harry Katz, principal at Norwest Consultants, blasted lenders decisions to promote lending that exceeds mainstream affordability: “I refuse to contemplate 100 per cent loans for my clients. If anyone needs this they can't afford the property.”
The study also revealed a rise in borrowers opting for fixed rate products, while interest in discount and variable rate products waned during 2005.
