Lenders Criticised For Pulling Plug
Criticism has risen for those mortgage lenders who have recently withdrawn their 100%-plus mortgage deals from the property market, leaving first-time buyers stranded.
Hamptons Mortgages in particular has slammed the decision to scrap such mortgage packages, which offered the only opportunity for struggling first-time buyers to step foot on the property ladder.
Managing director, Jonathan Cornell, of Hamptons Mortgages claims the disablement of first-time buyers to afford property will only contribute to the already weakening housing market in the UK.
He said: "In the light of the weakening housing market, lenders are pulling their 100%-plus LTV mortgages at a rate of knots. It is a real shame to see so many products being removed from the market as in the current economic situation, these provided the only real hope for struggling first-time buyers."
The average UK house price is now far greater than the average salary, particularly that of the average young first-time buyer. Those unable to come up with a deposit previously relied wholeheartedly on the funding a 100%-plus loan-to-value mortgage provided. Now the prospect of becoming a homeowner looks grim as without a deposit not only are there fewer options available, but also the first-time buyer will be forced to pay a much higher premium for the added risk that the lender is taking on.
Cornell added: "Unfortunately, the disappearance of so many 100%-plus LTV mortgages from the market will make it even harder for first-time buyers to purchase a property and in turn, this may continue to weaken Britain's already fragile housing market."
One by one mortgage lenders are now rapidly withdrawing in the aftermath of the credit crunch, compared to last year which saw them falling over one other in order to enter the market.
"I hope that once the credit crunch is over and the fears over house prices subside, that we see these popular mortgages re-introduced," said Cornell.
Published on March 5, 2008
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