Death of 100 Percent Mortgage Deals

April 24th, 2009 by admin · No Comments

It is common knowledge that the mortgage and property market has been one of teh worst hit form the economic recession being faced by UK. To make things worse in a recent announcement, Gordon Brown has called to permanently scrap 100 per cent mortgage loan deals. In reality 100% deals have become non existent for quite some time now. Lenders stopped offering such deals almost a year ago when the propery market started declining significantly. Although one member of the monetary policy committee has quite openly expresed disagreement with Mr. Brown’s announcement to scrap 100% mortgage deals. The member has publicly disagreed and said that in some cases this type of risky mortgage lending practice should be permitted.

One member of the monetary policy committee, Kate Barker, made it clear in a Spectator Magazine interview that she thought mortgages at 100 per cent shouldn’t be permanently ruled out. Although many first time buyers may feel respite on hearing this, this is unlikely to have any real effect.

Kate Barker was reported as saying: “I’m not personally convinced I want to say we’d absolutely never have 100% mortgages . You might want to have rules about the averages across the book - all that kind of thing - rather than saying ‘no, never’, because personal circumstances vary enormously.”

For the near future the property market and lending conditionsd are unlikely to change dramatically. The property market and the economy in general may start improving soon however it will be some time before there is a significant change in loan to value on mortgage deals. 100% mortgages in particular may never come back. 100 per cent mortgages were very popular during property boom years. Howevere they have comepletely disappeared from the mortgage market. Today first-time buyers are being asked to put a very high percentage as down payment for the property before mortgage covers the rest of the property value. First time buyers are expected to put up a deposit of at least 25 per cent of property value and in some cases even as high as 30% of teh property value. LegallyhHowever, 100 per cent mortgages are still permitted. Although only theoretically.