Over one third of first-time buyers want 100% mortgages, and one in five would be happy with a 120% loan.
The findings come in research by discount website MyVoucherCodes, after it noticed a rise in the number of searches on-site for the term ‘first-time buyer 100% mortgages’ and ‘120% mortgages’.
The site polled a total of 1,699 UK adults who were currently in the first-time buyers’ market, i.e. those looking to secure a mortgage at present.
Respondents were given information on the concept of 100% mortgages and 120% mortgages, including being told of the risks of negative equity.
When asked if a 100% mortgage was something they would consider if one was available to them, more than a third of respondents (34%) said ‘yes’, while 21% of the respondents said they would consider a 120% mortgage.
Despite all respondents claiming to be in the market to buy a house and secure a mortgage, the average deposit saved so far was just £3,500.
Mark Pearson, chairman of MyVoucherCodes, said: “Although there are various schemes out there to encourage first-time buyers, like 5% deposits on new homes, it’s just not enough to make it viable for some people.
“However, 100% mortgages are not a good idea and it’s worrying that so many people would consider risky lending schemes like 100-120% mortgages.”
* Meanwhile, separate research by Clydesdale and Yorkshire Banks has found that most first-time buyers want three-bed homes because they want to live there for some time. It found that 29% want three-bed houses compared with just 5% who would want a one-bed house. More than a fifth are hoping to live in their first homes for ten years or more.
Comments
IT wizard - A study by Zoopla.co.uk has backed up previous studies that show that taken as an average, buying is the cheapest option. The average rent is 14% more than the average buyer would pay in interest on an interest-only mortgage.
Significantly this assumes an interest-only mortgage and at very low interest rates. Even if you are able to get an interest-only mortgage, what advantage does this give you over renting anyway with the average ftb now being much older than before, HPI may not cover the initial loan sum. Some reach retiriment age and can no longer afford to keep paying the mortgage, and may have to sell up to repay the debt.
So all in all horses for courses and all that.
The latest budget has added another prop to the market, by extending first buy to help to buy...the unfortunate thing is that many tempted by this will probably end up trapped in neg equity as they will probably not have the foresight to look beyond a starter home and even if they do it will probably be declined by the regs.
If banks offer a 100% mortgage at these very low rates would advise buyers to go for it....absoloutely but its just not going to happen.
Paying rent forever is worse than buying at these rediculous prices. The 100% mortgage is a no brainer for someone who cant save for their deposit due to their sky high rent.
Mortgage companies should be able to keep track of your rent payments as a sign of "can you afford it?" and you should have to take compulsary redundancy cover to protect the mortgage.
Get the Chancelor to agree to these in todays Budget