In a move to help mitigate against the growing affordability crisis, lenders have been offering buyers the option of taking out a mortgage without having to put down a deposit.
Seen to directly target strapped for cash first-time buyers, these deals are still competitive with the average initial rate payable on a 100 per cent loan-to-value (LTV) a reasonable 6.49 per cent.
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Compared to May 2006 the market for this type of mortgage has definitely expanded. From only 60 fixed mortgages from 17 providers back then, there are now a further ten providers offering these types of products, increasing the offering to 127. This huge 112 per cent rise is set to continue as affordability worsens and interest rates rise further.
Sean Gardner, chief executive of MoneyExpert.com, said: Our research shows that around 2,500 mortgage applications are being turned down by banks every day as Bank of England interest rate rises hit home. Often its the youngest applicants who are worst affected by high interest rates as getting onto the property ladder becomes more difficult.
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Affordability is the buzz word at the moment as lenders look to find new ways to bring first-time buyers into the property market. Offering 100 per cent mortgages is another example of this, as saving for a deposit on even the average property can take years.
One thing is for sure, 100 per cent mortgage definitely wont be fizzling out any time soon. There are now more 100 per cent products around than for 75 per cent or less. However finding the funds for a deposit is always the better option as there is a huge step down in interest rates, with products sub 5 per cent still available on these deals.
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