One in five more first-time buyers now opt for a 100 per cent mortgage, the Mortgage Advice Bureau (MAB) has claimed.
While 21 per cent more homebuyers chose a 100 per cent mortgage in 2006 than in 2005, 50 per cent more first-time buyers were also prepared to take out a mortgage greater than the value of their home.
Meanwhile, one in ten borrowers had no qualms about taking out a mortgage worth the entire value of their property – or even more.
For many first-time buyers, the 100 per cent mortgage is now a necessity for getting onto the housing ladder in the light of continuing house price inflation and successive interest rate hikes, MAB's lending manager Brian Murphy commented.
But the research also revealed that many homebuyers were relying on their 100 per cent-plus mortgage to fund not just home purchase but also other costs they were not able to meet, such as decorating their new home.
Nevertheless, the picture of careless borrowing is not entirely bleak, as "many in the market still view these products as the final resort for mortgage borrowing," Mr Murphy stressed.
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