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100% plus LTV mortgages set to grow in popularity

The 100 per cent mortgage market is set to grow, according to industry experts.

Brokers were polled by Alliance & Leicester, which reveals today, with 78 per cent predicting that increasing amounts will be taken out in future.

Almost three quarters said that they had already advised clients on the product, which is at present only offered by five lenders.

Mortgages of 100 per cent or more LTV (loan to value), the purchase of which means that no lump sum or deposit need initially be paid, might prove especially popular with first-time buyers.

Jeremy Claridge, head of specialist mortgages at Alliance & Leicester, said: “We are pleased to see that most brokers predict this market will grow within the next two years as these products offer a great opportunity for borrowers who need some additional funding.

“The mortgage market is continually changing and there is an ever-growing need to find more flexible products to allow people to get on the housing ladder or to manage their existing borrowings in a better and more efficient way.”

The rise in popularity could be seen as a consumer response to runaway increases in house prices. The latest government figures, released earlier this week, show that the average house in London was almost 15 per cent more expensive than this time last year.

The data also revealed that the overall year-on-year inflation rate for house prices stood at 10.9 per cent.

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