A poll of 2,000 people has indicated that about half of UK homebuyers would like to see a return to 100% loan-to-value mortgages which would help them overcome the difficulties in saving up large deposits. Half of those surveyed that are looking to buy a new home within the next couple of years were strongly in favour of relaxing the current restrictions on mortgage lending to allow more people to be afford new homes.
Older and Younger Homebuyers Agree
The research also discovered that of those who agreed that a return of zero deposit mortgages was a good idea, the most keen to see a return were those aged between 25 and 34. However, it was a popular idea among all ages of homebuyers, including both much older and very young adults.
The survey was conducted by lender and mortgage broker Ocean Finance, and their spokesman, Gareth Shilton, said, “Buyers would welcome a return to 100% [loan-to-value mortgages] and many lenders would like to offer them.”
Ocean Finance’s reasoning is that many of the people trying to get onto the housing ladder are struggling to save up enough money for the deposit, especially when house prices are continuing to rise. He added that these hopeful buyers are finding themselves stuck on a never ending treadmill.
Shilton continued, “The Mortgage Market Review states that lenders must ensure buyers can afford a mortgage. So it’s frustrating for those buyers who are able to prove they can afford a mortgage, but can’t raise a deposit because of their rent and living costs. It would be a brave lender who is the first to go back into the mass market with 100% [loan-to-value mortgages], although others would no doubt follow suit.”
Disappearance of 100% Loan-to-Value Mortgages
The zero deposit mortgages were discontinued during the overhaul of the financial market a couple of years ago. The Mortgage Market Review was published in April 2014 and designated much more responsibility on lenders to ensure that anyone borrowing money to buy a home only received mortgages they could afford. This led to the disappearance of 100% loan-to-value mortgages.
There is no denying that the overhaul was necessary and the measures put in place were certainly well-intentioned, but it does seem that a little flexibility in this area might help a lot of people who can afford certain a mortgage, but not the deposit currently required to secure it. With more and more support like this, there could well be a change in the air, though obviously it is going to take a lot more than one survey.
