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100% mortgages were a type of mortgage product very popular with first time buyers. They enabled you to borrow the full value of the property in a mortgage loan. In other words, if you were purchasing a property for 150,000 with a 100% mortgage you would not need to find a deposit. The mortgage lender would provide you with a mortgage for the full 120,000 amount.

100% mortgages ceased to be made available by UK lenders in the final quarter of 2008, as the credit crunch crunched. In a period of literally just a few months, UK mortgage lender withdrew their 100% mortgage products from the market.

100% mortgage products were naturally very attractive and popular products for first time buyers. Without 100% mortgages, many people who were enabled to get onto the property ladder between 2000-07 would have been left dreaming about home ownership. In fact one study has shown that more than 50% of people that obtained mortgages between 2003-2006 would not have been able to obtain mortgages under current market conditions. This reduced flow of mortgage approvals has resulted in fewer buyers, and therefore a stagnated housing market with prices falling across many regions of the UK.

Looking back, with the benefit and wisdom of hindsight, it is easy to criticise 100% mortgages and flag them up as risky products offered irresponsibly and short shortsightedly by UK mortgage lenders. But 100% mortgages will almost certainly have contributed to the housing boom which occurred between 2000 to 2007 which very many people benefited from. As mentioned above, many homeowners would not have been homeowners over the last 10 years had it not been for 100% mortgages. The sudden rapid withdrawal of 100% mortgage products will have in itself acted as a significant factor in stagnating the housing market by reducing the number of first time buyers, I suspect.

So will we see 100% mortgage again? This is unlikely in the near future, and the powers that be have even suggested banning them for good. But I certainly expect that we will see 95% mortgages again some time in the next 3 years, and once the mortgage market returns to strength lenders will invent innovative products, no doubt, in order to win business. This may be 100% mortgages where a charge is also taken over a parent or family members property. Or maybe a 90% mortgage with a 10% unsecured loan. Who knows…

So in conclusion with my prudent hat on, and with the benefit of a bit of hindsight, I guess although 100% Mortgages were always going to be a safe bet for borrowers and lenders in a rising property market – they were always going to lead to problems if the property market turned. And turn it has. Are 100% mortgages intrinsically bad? No – I don’t believe so. Are they risky? Of course. Greater equity has always meant lower risk for lender and borrower. However, if we just look at raw statistics, I am sure the number of people that have benefited financially and otherwise from 100% mortgages over the last 10 years by far outweighs the number that have suffered.

But for now, and maybe forever – RIP 100% mortgages.

For further information and article on 100% mortgages visit this website : 100% Mortgages UK.