No deposit required

Credit fear as Barclays offers 100% mortgage

Castlewell Ellon Barratt
Barratt homes at Castlewell Ellon

Barclays has become the first lender to launch a deposit-free mortgage since the credit crunch 10 years ago.

Some home buyers will be offered a loan equivalent to 100% of of the value of the property against normal requirements of up to 10%.

A family member or guardian must provide a form of security by putting up 10% of the price in cash for three years.

The move has prompted concerns of a return to risky lending. Widely available loans of this magnitude helped precipitate the debt-fuelled financial crisis in 2008. Northern Rock also offered 125% mortgages before its collapse.

The Bank of England has lately taken action to avoid repeating these mistakes though it is not clear what view it takes of Barclays’ new loan.

However, a return to deposit-free loans comes amid increasing difficulties among some borrowers to get on the property ladder.

Research by Legal & General found parents will provide £5 billion this year to help their children buy a home. This will amount o a quarter of all mortgage transactions.

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