Almost half the population in the UK, some 48% think re-introducing 100% mortgages is a good idea, a nationwide poll has found.
The research from YouGov, which polled the views of 9,713 British adults, asked whether mortgages that don’t require a deposit because banks lend borrowers the entire cost of a home where a good idea, a bad idea, or if they didn’t know.
While almost half of those polled believed this category of mortgage to be a good idea, 32% said that it was a bad idea, with a not-insignificant 20% saying that they don’t know.
The outlook does vary with age, from 46% of those aged 18 to 24 responding positively, to 49% of those aged 65 and over thinking it is not a good idea.
There are also differences among those thinking it a bad idea, of which 22% in the 18 to 24 age bracket agreed, compared with 37% of those aged 65 and over.
Broken down regionally, 51% of people asked in Scotland said it was a good idea, while the region with the lowest enthusiasts was in London, at 45%.
The poll also shows that females were more likely to support 100% mortgages, with 52% thinking they are a good idea compared with 44% of males.
Some lenders already offer 100% mortgages, although these either insist on having a parent act as a guarantor or that they put some of their own money into a ring fenced account to act as security.
For example, Marsden Building Society’s Family Step mortgages lends at 100% LTV mortgage, albeit with 20% security from family through savings or property.
But it would not be a solution to the current housing crisis, according to Danny Belton, head of lender relationships at the Legal & General Mortgage Club. ‘At the very least it would mean lenders would have to significantly increase the amount of capital they would be required to hold, which is just not sustainable,’ he said.
‘What would be more beneficial is for more buyers to utilise schemes such as shared ownership and Help to Buy or even make use of a Guarantor mortgages,’ he added.
But he also pointed out that there does need to be more innovation in the home lending industry, such as the Cambridge Building Society’s 98% LTV First Step option, aimed at would be buyers currently in rental accommodation who would pass the affordability checks, have a good track record of making rental payments, but are struggling to raise a deposit for their first home.
‘This niche market is only going to grow in the coming years, but 100% LTV mortgages are not the answer to challenges facing younger buyers,’ he concluded.