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50% increase in the number of Brits applying for 100% plus mortgages

New research published by mortgage brokers Mortgage Advice Bureau (MAB) indicates that there has been an alarming rise in the number of first-time buyers in the UK applying for home mortgage loans that exceed the value of the property they are purchasing.

MAB said that overall there has been a 21% increase in the last year in the number of homebuyers applying for 100% home loan mortgages. However, there had been a 50% increase in the number of homebuyers applying for mortgages that were worth more than the value of the property.

According to research recently published by, UK home mortgage lenders are now offering homebuyers in the UK an option of 155 different home mortgage loan products that are offering homebuyers the opportunity of borrowing anywhere between 100% and 125% of the property's value.

100% plus home loan products are popular among first-time buyers in the UK desperate to get on the housing ladder as they give immediate access to the UK's housing market without having to go through the trouble of having to save for a deposit on the home purchase – which can be a fairly sizeable sum of money. Moreover, 125% home mortgage loans are increasingly popular because they also allow homebuyers to pay for any taxes and costs associated with buying the home, while leaving enough in the pot to help furnish and decorate the home.

Meanwhile, banks and home mortgage lenders in the UK have been keen to market their 100% plus home mortgage loan products. In the last few months a number of leading UK home mortgage loan providers have increased the amount they are willing to lend for property purchases to 100% plus; including Alliance & Leicester, Northern Rock and the Halifax.

Commenting on the growing number of Brits applying for 100%-plus home mortgages, Brian Murphy, lending manager at MAB, said: "100% and 100%-plus loan-to-value products are just two examples of products designed to help and facilitate first-time buyers' access to the market."

Murphy went on to comment: "…as seen through the increasing number of buyers opting for these products in 2006, these mortgages are now a very real solution for first-time buyers who stand little hope of entering the housing market without them."

Nonetheless, with the Council of Mortgage Lenders reporting that approximately 2% of all homebuyers last year, or 22,000 Brits, opted for a 100% plus home loan mortgage product last year, critics note that banks offering home mortgage loan products that exceed the value of a property also charge additional interest on the loan and warn potential homebuyers in the UK considering such an option to ensure they undertake a careful comparison of the products on offer to make sure they find one that best suits their needs and affordability.

Richard Smith
1st March 2007


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