Have we seen the end of the 100% mortgage?
The UK government has today indicated the death of the 100% mortgage is imminent with regulatory powers set to be introduced to curb what many believe to be one of the main factors in the ongoing economic downturn. Quite how the authorities can effectively introduce this policy into a "free market" remains to be seen as in the past there have been various "routes" around such attempts to control the market.
There is no doubt that the 100% mortgage, and the 120% mortgage introduced by Northern Rock, has pushed many of the UK population into serious financial difficulties over the last few months. However, there must also be a degree of blame on the heads of UK consumers, many of whom have taken on loans and mortgages which they would have found it very difficult to repay even in the good times. While the government is unlikely to effectively ban 100% mortgages by law, they will look for assistance from the leading UK banks to resist the temptation to chase high risk profits.
The UK mortgage market which we knew just two years ago has changed dramatically over the last few months and while many expect a very different mortgage market in the future, there is every chance that we will revert to the more high-risk environments as and when the ongoing recession is forgotten.
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