The director-general of the Council of Mortgage Lenders has revealed that the housing industry has seen the end of 100% Loan to Value mortgages.
Michael Coogan revealed his thoughts at a Strategy Summit last week.
Coogan, speaking at the Luton Hoo hotel just outside Luton explained that lenders were no longer prepared to take a risk on loan to value mortgages above 95%.
He told delegates at the conference, “Lenders are finding ways to be more flexible, but they want to ensure first-time buyers put down enough of a deposit to show they are taking the mortgage seriously.
“Therefore I believe 100% LTV mortgages have been consigned to history.”
Coogan did admit that in certain circumstances, there were ways of mitigating the risk of offering a 100% mortgage, with parental guarantees and mortgage indemnity insurance softening the blow, but not always removing the risk entirely.
First time buyers are struggling to find the huge deposits required, despite being able to comfortably afford the mortgage repayments on a monthly basis.
“As an industry we are not looking to undertake any initiatives specifically for first-time buyers because there are downsides to doing so such as house prices becoming inflated,” added Coogan.
The CML did reveal that 14,600 mortgages with a combined value of £1.7billion has been advanced to first-time buyers in March, 28% up in number, and 31% up in value on the same period in February, but nearly 20% down on the previous year.
Sales and Marketing director, Mike Fitzgerald of Emba Group didn’t think that it was fair to say they’d never come back, but did admit it was unlikely in the present climate.
He said, “Lenders have got to be careful, because if they don’t try to help first-time buyers they are in danger of switching off younger Britons’ house-buying mentality.”
Why don’t you try our mortgage calculator?, need more advice? call us on 0800 678 5929.
