MORTGAGES
Mortgages The return of the 100% mortgage – with strings attached
By Richard John, Partner, Matthew Arnold & Baldwin LLP. O
ver the past few months, it’s been impossible to pick up a newspaper or turn on the television without hearing negative things about the housing market –
and, in particular, the difficulties facing potential first time buyers desperately trying to get a foot on the housing ladder. Just last month, the National Housing
Federation, which represents hundreds of not-for-profit housing associations in England, issued a warning that the housing market is in such crisis that home ownership is in danger of slumping to just 63.8 per cent over the next ten years – the lowest level since the mid-1980s. This prediction may not be too wide of the mark, after official figures published by the Department for Communities and Local Government in July revealed that the number of people renting privately-owned properties in England has increased by 55 per cent in the past six years. Also, in the
42 OCTOBER 2011 PROPERTYdrum
Aldermore Bank is offering 100%
mortgages to first time buyers across England and Wales.’
same month, a survey of potential property buyers by Rightmove, the online estate agent, found that seven out of the 11 regions in the United Kingdom are now ‘first-time buyer blackspots’ because first- time buyers are unable or unwilling to purchase a property due to rising living costs and the continuing financial uncertainty.
THE BAD NEWS... AND THE GOOD The bad news, unfortunately, doesn’t end there. Whilst mortgage lending is picking up, the picture is still not good for first- time buyers. According to the latest figures
from the Council of Mortgage Lenders (CML), mortgage lending is beginning to increase but the number of loans made to first-time buyers is actually falling. Also, the lending criteria for new mortgage borrowers remains strict – the average deposit is still 20 per cent, but the multiple of income that first-time buyers can borrow is actually shrinking. And, if that isn’t bad enough, the number of new homes being built is at its lowest level since the 1920s. So, with all this bad news, where does
this leave first-time buyers? A small number of lenders are now offering 100 per cent mortgages. Northern Bank, Tipton & Coseley Building Society, and Marsden Building Society are all doing this, but certain restrictions apply (e.g. that you live locally, or hold a minimum of 20 per cent in a charged offset savings account.) However, Aldermore Bank has gone one step further than this by offering 100 per cent mortgages to first-time buyers across the whole of England and Wales.
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