Just Nine Lenders Still Offer 100 Per Cent Mortgages

Just nine lenders still offer 100 per cent mortgages direct to the public as mortgage companies turn their backs on potentially risky customers, new analysis* from mform.co.uk shows.  And rates and fees on 100 per cent deals have increased despite the Bank of England cutting the base rate.

mform.co.uk research shows the number of lenders in the 100 per cent loans market has dropped from 22 six months ago to just nine now in England. And the number of products on offer has fallen from 162 to just 39 now. In Scotland only seven lenders will sell 100 per cent mortgages.

The lowest rates on offer in October were around 5.99 per cent – now they are 6.14 per cent despite the Bank of England cutting the base rate twice since then. Typical fees have risen from £4,954 to £5,134.

 Francis Ghiloni, mform.co.uk's Marketing and Business Development Director, said: "The 100 per cent mortgage isn't dead yet but borrowers who don't have deposits now have significantly less choice and are having to pay more.

"Lenders have given up on 125 per cent mortgages but there is still life in the 100 per cent mortgage market albeit with higher rates and fees as companies price for risk.

"Many borrowers – and particularly first-time buyers – can benefit from 100 per cent mortgages. If borrowers can comfortably afford the repayments 100 per cent loans remain a sensible idea.

"However with house prices falling there is a real risk of negative equity for anyone taking a 100 per cent mortgage and anyone doing so should compare the deals carefully and rank them on a true cost basis."

Lenders still in the 100 per cent market include Royal Bank of Scotland, NatWest, Abbey, Bristol & West, Scottish Widows Bank, Stroud & Swindon, Manchester, Ipswich and Tipton & Coseley. Stroud & Swindon and Tipton & Coseley don't offer 100 per cent loans in Scotland.

Companies which have stopped offering 100 per cent mortgages in the past six months include Yorkshire Building Society, Standard Life Bank and Co-operative Bank.

The majority of 100 per cent loans available are two or three-year deals with rates ranging from 6.14 per cent to 7.44 per cent. Royal Bank of Scotland offered a two-year tracker six months ago at 6.54 per cent with fees of £4,954 on a £150,000 loan. The rate is now 6.7 per cent and the fees are £5,134.

mform.co.uk offers a unique free service linking mortgage customers directly to the application systems of lenders. It is the only website which allows borrowers to search the whole market for the best products ranked on true cost and to apply directly to lenders.

The service is completely independent and is not influenced by commercial deals or advertisements. There are no distracting sponsored links and borrowers can also research mortgage product features and lenders' service levels.

mform.co.uk works with lenders by enabling them to link with informed mortgage customers and by reducing lenders' costs allows them to pass on savings to customers.

The service, which is free and easy to use, can be found at www.mform.co.uk

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