Full mortgages axed in UK

First-time buyers with no deposit were dealt a devastating blow in the UK today when the final mainstream lender offering 100% mortgages reportedly axed the deal.

Although Abbey’s website was still promoting 100% mortgages this morning, the high street bank told reporters it had withdrawn from the deal as of last night due to market conditions.

“This is normal given the current market conditions and is in line with recent moves by other lenders,” a spokesman told the Daily Mail.

Abbey also increased the cost of many of its fixed-term and tracker mortgages.

Earlier yesterday, Abbey released the results of a survey which found the number of homeowners who would take out a five-year fixed rate mortgage has doubled during the past month to around 24%.

The group said the rise in people wanting to fix for five years was due to borrowers looking for certainty for a longer period due to the current problems in the mortgage market arising out of the credit crunch.

Nici Audhlam-Gardiner, director of Abbey Mortgages, said: “Recent reports about the shrinking mortgage market seem to have had a profound effect on borrowers.

“Not too long ago borrowers felt that shopping around regularly was the way to get the best deal, now homeowners faced with a dwindling number of mortgage deals seem keener then ever to lock themselves into a deal for longer than two years such as a five-year fix.”

The UK’s fifth largest building society, Chelsea, yesterday announced changes to its Prospect range of mortgages for people with impaired credit records.

From today, the group is raising rates by 0.3% across the whole Prospect range, while it is reducing the maximum loan to value ratio it will lend on to 65%.

It is also withdrawing all of its Adverse Plus products, which previously lent to people at the higher end of the adverse credit scale.

:: ICM questioned 1,000 people during March for Abbey.