According to figures from the brokerage, the number of 100 per cent loan-to-value (LTV) products it has sold in the first nine months of the year more than doubled, from 549 in 2006 to 1,209 in 2007.
MAB also charted a 45 per cent increase in the level of 100 per cent plus mortgages in the same period, from 1,394 in 2006 to 2,022 in 2007.
Brian Murphy, head of lending at Mortgage Advice Bureau, believed high LTV lending was essential in allowing first-timers access to the market.
“The need for 100 per cent LTV mortgages has never been more apparent than over the past year. Rates have been forced to rise in order to rein in inflation and slow ever-increasing house prices and as a result, buyers have been stretched to the hilt. However, with current conditions and the initial signs of house price stabilisation, there might be a glimmer of hope, although this situation is a long way from reality.”
However, Francis Ghiloni, marketing and business development director at mform.co.uk, believed the threat of falling prices put those with 100 per cent mortgages in danger of negative equity.
“Rising prices have meant that people need to borrow even more to get the property they want and lenders have responded to this by increasing the number of 100 per cent mortgages available. However, if prices fall, as some predict, home owners with these deals may encounter negative equity.”
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