Young people should be given 100 per cent mortgages to get on housing ladder, report claims
A report says building societies and lenders should 'revisit the case' for offering them to first-time buyers to ease the burden on parents
YOUNG people should be able to obtain 100 per cent mortgages to get on the housing ladder, a report says.
Building societies and lenders should “revisit the case” for offering them to first-time buyers to ease the burden on parents.
But critics warn borrowers are more likely to default on 100 per cent mortgages because interest rates are usually higher.
They were also implicated in the fall of Northern Rock during the credit crunch. The lender, which had offered 125 per cent mortgages, ran out of funds and had to be bailed out by the taxpayer in 2008.
The deals almost vanished when the Bank of England imposed tougher lending criteria after the 2008 credit crunch.
The “Bank of Mum and Dad” stepped in and 59 per cent of young homebuyers now rely on some family funding, said the report for the Building Societies Association.
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Co-author Bob Pannell, the Council of Mortgage Lenders’ former chief economist, said: “Our young people face huge challenges in buying their first homes. Families instinctively want to help and it’s the job of lenders, regulators and government to ensure that they have more opportunities to do so in a sustainable way.”
The report says new technology such as Open Banking means risk assessment will be more accurate.
But finance guru Martin Lewis said he was nervous at the thought of young people taking out 100 per cent mortgages.
Other recommendations to help first-time buyers making it easier for older people to downsize.
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