First-time buyers with no cash savings were shut out of the housing market yesterday after Abbey became the last mainstream lender to stop offering 100% mortgages. Financial Times, The Times, Daily Telegraph, The Guardian
Borrowers, who a month ago had a choice of mortgages offering 100% of a property’s value, will now need a deposit of at least 5% unless they have a parental guarantee or enter a shared equity scheme.
Lenders such as Alliance & Leicester, Britannia and Cheltenham & Gloucester, are demanding minimum deposits of 10%.
The disappearance in effect of 100% loan-to-value mortgages will severely hamper the ability of first-time buyers to access the property market.
'This is a huge blow for first-time buyers struggling to get on the housing ladder,' said Melanie Bien, director of Savills Private Finance, the broker. 'Despite falling house prices in some areas, it is still extremely difficult for first-time buyers to save up enough of a deposit to buy their first home.'