Charles Haresnape, managing director of Aldermore, told The Mortgage Event in Bristol today that the bank is considering allowing guarantors to place a lump sum of money in a savings account with the bank, that it accepts in lieu of a deposit.
Currently, Aldermore’s 100% deal sees parents or guardians guarantee 25% of the loan through a charge on their own property.
Haresnape said that first-time buyers are becoming a niche sector in the mortgage market as their numbers plummet and parental help is ever more important.
He said: “First-time buyers’ proportion of the market has and will continue to reduce. The Bank of Mum and Dad will continue to be one of the biggest banks in the UK. It’s how we access that in flexible ways and help them.”
Haresnape told Mortgage Solutions that the new option for the 100% deal would not make it an offset mortgage, with the interest rates offered on the savings account and mortgage remaining separate from each other.
Aldermore plans to introduce this and possibly other options in the next few months he said, alongside possibly reducing the interest rate on its 100% LTV deal.
He said: “We are trying to get the risk right. The 100% guarantor mortgage is not a deal for everyone, but if you are cash poor and asset rich, it’s an option.
“We are trying to bring the price down, but it won’t be that soon as we have to respond to the markets.”
In addition, Haresnape said that niche sectors, such as buy to let and armed forces mortgages, are predicted to grow 25% by 2013.
“Recession enhances the niche opportunities. We can’t compete with the big banks; we want to be nimble around the edges of the market and talk to credit worthy borrowers who can’t get finance,” Haresnape said.
