Thousands of first-time buyers are facing the spectre of negative equity after a sharp increase in the number of 100% mortgages available,according to on-line mortgage broker Daily Telegraph

The Mortgage Advice Bureau said the number of people taking out 100% mortgages had more than doubled in the first nine months of the year compared with last year.

As a result, even a small fall in house prices would leave people who have taken out these loans owing more on their mortgage than their home is worth.

Francis Ghiloni, marketing and business development director at, said: “In April this year, our research showed there were 92 different 100% mortgages to choose from, but by Oct 1 this had increased to 160.

“However, if house prices fall, as some commentators predict, homeowners with these mortgages are likely to encounter negative equity.”