Tue 09 May 2023
100% mortgages are rumoured to be making a comeback.
The products were blamed as a cause for the 2008 financial crash, with borrowers overloaded with lax lending criteria leading to many homeowners holding too much debt and left unable to meet monthly repayments once the economy collapsed.
Skipton Building Society is now reported to be planning to launch loans for first-time buyers who do not have a deposit.
Precise details on the mortgage remain under wraps, according to The Times, but borrowers will need to demonstrate a history of paying rent comparable to mortgage repayments for up to two years.
The deal will be fixed for over two years to guard against the risk of borrowers ending up in negative equity, the newspaper said.
Analysis by Zoopla research director Richard Donnell in response to the reports suggested this type of scheme works best in lower value markets.
He said on Twitter: “The mortgage repayments will be higher than rent but you get to buy with no deposit - stress testing mortgages means it works for those on £40,000 to £60,00 household incomes.”