In light of recent statistics showing a dramatic increase in the number of 100 per cent mortgages, many more borrowers are facing negative equity as the housing market looks to be on increasingly unstable ground.
mform has estimated that between January 2006 and August 2007, 33,000 first-time buyers will have taken out 100 per cent or more mortgages.
Indeed, research has revealed that 2.08 million people aged 34 or under who plan to apply for a mortgage over the next three years intend to borrow over four times their salaries.
Some 828,000 of these people plan to borrow over five times their income and 290,000 of them will be borrowing over six times. The vast majority of these people will be first-time buyers struggling to get onto the property ladder.
Francis Ghiloni, mform.co.uk marketing and business development director, said: “Rising property prices have meant that people need to borrow even more money to get the property they want and lenders have responded to this by dramatically increasing the number of 100 per cent mortgages available.
"In April this year, our research showed that there were 92 different 100 per cent mortgages to choose from, but by 1 October this had increased to 160. However, if house prices fall, as some commentators predict, those homeowners with these mortgages are highly likely to encounter negative equity.”
