Mortgages -
Lenders cut back on 100 per cent plus mortgages - 20/02/2008
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First time buyers could face financial hardship as lenders are cutting back on 100% and above mortgages.
As the market for these mortgages shrink not only will first time buys be effected but so too will households looking to remortgage, as they may face a higher rate on their repayments.
These mortgages were ment to help first time buyers get onto the property ladder without putting down a deposit but have been harshly criticized for promoting debt.
Alliance & Leicester were the first lenders to act by pulling out their 125% PlusMortgage and others followed suit. This is in part being blamed on the disaster in the U.S. sub-prime mortgages.
Louise Cuming, head of mortgages at price comparison site moneysupermarket.com, said: "With so many prominent lenders exiting the 100%-plus mortgage market this week, consumer confidence is going to be knocked again.
"First-time buyers will be hit hardest, with repayments likely to shoot up when they come to remortgage. At a time when consumer confidence is so low, it is disappointing that lenders are adding to the panic."
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