According to the latest Mortgage Solutions poll, a quarter said they had seen a rise in demand for 100% LTV mortgages, while 8% had seen a fall.
No-deposit, or 100% LTV, mortgages have started returning to the market slowly over the past year or so, with Skipton Building Society bringing out its Track Record mortgage, which can go up to 100% LTV, dependent on the customer profile.
In the past few months, April Mortgages and Gable Mortgages have brought out 100% LTV deals.
According to Moneyfacts figures, there are around 25 100% LTV products on the market, which is up from 15 in 2023.
Looking at average pricing, the average five-year fixed rate stands at 5.7%, which compares to 6.19% in 2023 and 6.17% in 2024.
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Brokers have not seen ‘meaningful shift in demand or uptake yet’ for 100% LTV deals
Ying Tan, CEO of Habito, said the poll findings were not a surprise, noting that 100% LTV products are a “welcome innovation and have grabbed plenty of headlines, but we’ve not seen a meaningful shift in demand or uptake just yet”.
He explained: “At Habito, we’ve had lots of enquiries, but affordability hurdles and stricter stress testing tend to be the main blockers. Even for those who do qualify, once they see the interest rate compared to a 95% LTV, many find a way to scrape together that minimum deposit instead.
“That said, these products do fill a real gap, particularly for renters with a strong track record of high monthly payments who simply haven’t been able to save. In areas where monthly mortgage payments under these schemes are cheaper than rent, it could be genuinely transformative. But the options are still very limited, and customers should go in with eyes wide open; there’s greater risk of negative equity, fees may need to be paid upfront, and eligibility isn’t straightforward.”
Tan said there was “not a flood of demand right now”, but innovation to tackle the deposit barrier was needed and it would be “keeping a close eye as more lenders enter the space”.
Sonya Matharu, founder and adviser at The Mortgage Atelier, said she had received a few enquiries about 100% LTV mortgages, but demand had not jumped dramatically.
“Most of the clients I speak with are looking to borrow less where they can. There’s been a shift in mindset over the past year or so, and people are more risk-aware and slightly more cautious. Even when their affordability is strong, many are choosing to put down larger deposits where possible to help keep their monthly payments manageable over the long term,” she noted.
However, Matharu said 100% LTV products “have a place”, and that lenders that were offering them have “been sensible and put the right checks in place to limit risk”, but from a client perspective, it is a “big step”.
“I had a case recently where someone seemed like a great fit: strong income, high credit score, and a stable job. But they didn’t meet the internal scoring. Thankfully, they had access to a gifted deposit as a back-up, so we had other routes to explore, but it just shows how selective these criteria are – understandably so – and that’s something prospective buyers need to be aware of,” she noted.
Matharu said it was “encouraging” to see “lenders listening to what buyers are asking for and trying to make things more accessible”.
“Even when clients don’t proceed, they notice that effort and that can have a ripple effect on how supported they feel in the market,” she said.
Advice is key for 100% LTV mortgages
Carmen Green of Xpress Mortgages said it had seen a rise in enquiries since more 100% LTV mortgages had come to the market.
She said it had partnered with April Mortgages and was one of 49 mortgage adviser firms on the panel to advise and submit applications for this product.
“They have made this product available through intermediaries/advisers only due to its high-risk nature; they want to make sure those taking up the mortgages are fully informed and that the product is suitable for their current and future circumstances.
“As an adviser, I know the best questions to ask to really understand a borrower’s current and future plans, needs and preferences and general attitude towards risk, without needing to be told directly,” Green said.
She continued on to say that the main risk of 100% LTV mortgages was that if the property price drops in the short term, before any equity is built up in the property, borrowers could end up in negative equity.
This is where the mortgage balance owed is more than the property is worth, causing a deficit.
“This is a risk with all low-deposit mortgages, but having no deposit at all could increase the chances of this. It’s important, therefore, that scenario is discussed in depth. The overall cost of these products can be significantly higher than other mortgage options with 5% deposit or family assist options, so we would make sure we have looked at all the schemes available and compare the suitability of each to a borrower’s circumstances,” Green noted.
She noted that the “ideal borrower” for a 100% LTV mortgage as someone who has been unable to save a deposit of at least 5% of the purchase price of a suitable property in their preferred area or has current expensive living costs, like rent, so is unable to save for a deposit but wants the benefits of owning a home, or a borrower who prefers to invest their savings elsewhere.
“There are lots of other schemes already available and I believe the lenders are continuously looking for innovative ways to help buyers onto the property ladder/move up the ladder. Often, potential borrowers believe homeownership is out of reach due to outdated information being given by well-intentioned family members or general gossip.
“The best thing to do if you want to get onto the property ladder is to speak with a mortgage adviser, as they will be able to discuss the different schemes that are available – you might be closer than you think,” Green said.
John Phillips, CEO of Just Mortgages and Spicerhaart, which is the first estate-agency linked broker partner for April Mortgages’ 100% LTV deal, said it had seen an increase in enquiries for this product.
“It’s not just been a way to get people through the door, though; brokers are actively submitting cases, and we are seeing a really strong acceptance rate. Working with April, the data is telling us that no applicants are overstretching themselves and are in fact keeping good headroom between the loans they are [taking] out and the amount they could borrow.
“This proves what we knew all along that it is more about answering that deposit gap among otherwise creditworthy borrowers. The mortgage market should be a buffet, with something for everyone and lenders are certainly playing their part. This sensible and well-thought proposition from April provides a tangible option for many who dream of buying their own home,” he noted.
