Lenders have greatly increased the number of 100% mortgages that they have to offer in the UK, despite the higher interest rates and tighter lending restrictions for borrowers.

There is said to have been a rise in 100% mortgages by a huge 70%, over the last 6 months, regardless of the risks. Homeowners are being advised not to end up with a loan greater than the value of their home and to consider the fees that they will incur should they not be able to keep up with repayments.

With house prices continuing to rise, the 100% mortgage is becoming a very real prospect for first-time buyers, who feel that they are being left with no choice should they want to join the property ladder, which is said to be safer than having your money in the bank. However, this is not going to be the case, if interest rates continue to rocket.

It is suggested that an 100% mortgage plus is not the way to go for first-time buyers and that they should enlist the help of family and friends to get together a deposit, which more and more people are now doing. But is this the answer?

People are obtaining 100% mortgages all over the country, which is allowing so many first time buyers to establish a foot-hold on the property ladder, and this will continue to happen until we see a return more affordable house prices.

It appears that Northern Rock really have hit ‘rock bottom’, with news published that Bank of England has leant Northern Rock a massive £23billion.

It is almost as though we, the British tax payer, are in fact lending Northern Rock the money as the Treasury are the ones who are indemnifying the credit.  That’s £730 each, that we are giving to a mortgage provider, who are struggling to hold their heads above water.

The queues have dispersed and the ‘retail run’ has ended, but now they are experiencing a different kind of run, where they stand to lose a lot more money.

Quite famously, three quarters of Northern Rock’s funding came from wholesale markets through bonds and from finance provided by banks and financial institutions.  As the loans for these repayments have now fallen overdue and these financial institutions are demanding their money bank.  Northern Rock have found it virtually impossible to roll over these sums or find funds from other commercial sources because of the risks attached, so Northern Rock have had to tap into the Bank of England as a resource.  But how long can this go on?

The money that Northern Rock have borrowed is costing them.  It is not cheap.  And this is making a big dent on the Rock’s profits.  In addition, the three main bidders for the Rock can’t afford to take on the loans unless there is an iron-clad guarantee in place, that Government backed loans will stay in place.  As if the £23b wasn’t enough, there is also a further £20b of indemnities against deposits that the Treasury has endorsed, which means that there is in fact £40b public sector exposure to the Rock.  This is roughly 3 per cent of our entire economy.

At this stage, Northern Rock are heavily immersed in crisis and were in talks with the FSA, Bank of England and the Treasury to see whether this predicament warranted a full government enquiry.  The saga continues…

The Royal Institution of Charted Surveyors have reported a fall in house prices. According to the RIC, house prices fell in September and more of their members reported a fall locally than an increase.

It was also reported that there was a fall in first-time buyers for the 10th month in a row. The combination of higher interest rates and tightening on lending criteria are two major factors that have contributed to the downward spiral in first-time buyers being able to afford the jump from renting to home owner.

It is seemed unlikely that whilst economic growth and income is above the average, that we will experience a change in the housing market.

It is a daunting time that certainly is affecting the confidence of first-time buyers and sellers for that matter. The Council of Mortgage Lenders feels that the sheer burden of repaying the interest on mortgages for first-time buyers is the worst in 16 years, with a similar problem affecting people moving house. The CML foresees that this will only get worse in the forthcoming months.

Lenders have to cover the cost for the risk they are taking on and so mortgages are only going to become more and more expensive for customers who have poorer credit histories.

The right to buy new council houses to be scrapped as part of housing reform plans in Scotland.

It will be scrapped for new social housing built by housing associations,  in the hope to  supply more homes for rental.

Health Secretary Nicola Sturgeon set a “national goal” of a total of 35,000 new homes in a year by the middle of the next decade, compared with the present “simply inadequate” level of 25,000.

It also promised  to help first time buyers by a mixture of government grants, shared equity schemes, and mortgage-related produces and services.