Report calls for return of 100% mortgage for 1st-time buyers

First-time buyers could be offered 100 percent mortgages to take the pressure off the Bank of Mum and Dad.

A report from the Building Societies Association (BSA) identifies a number of options to increase home ownership among younger people, including higher loan-to-value mortgages. At the moment, most lenders will offer a maximum 95 percent mortgage to FTBs, but with higher property prices, it means some struggle to save for a deposit.

Prior to the 2008 financial crash, 100 percent mortgages were widely available to borrowers, with some lenders even going so far as to lend up to 125 percent of a property’s value.

However, post-2008, those mortgage products virtually disappeared from the market. While property prices have continued to grow, particularly in London and the south-east, first-time buyers have been forced to save longer for bigger deposits and to use the Government’s Help to Buy scheme to access finance.

According to the BSA report – entitled Building on the Bank of Mum and Dad – specific types of first-time buyers could be offered 100 percent mortgages again. The group would include those in high-earning professions and those who can expect to inherit money from their parents or other family members.

The latter group are the ones currently using the Bank of Mum and Dad – borrowing money from parents, other relatives and friends to buy their first home.

Bob Pannell, who co-wrote the BSA report, said: “Our young people face huge challenges in buying their first home.

“Families instinctively want to help, and it’s the job of lenders, regulators and government to ensure they have more opportunities to do so in a sustainable way.”