The move will essentially shut first time buyers, without a deposit of around £30,000, out of the housing market and advisers believe it will be a good year before lenders start offering 100 per cent deals again.
Baronworth director Michael Brill says: “I don’t think anyone was surprised that Abbey has gone the same way as the rest of the industry. The only advice we can give first time buyers at the moment is just to save as much as you can for a deposit. I think it will be at least 12 to 18 months before we start to see anyone offering 100 per cent mortgages again. Until the whole economy settles down there is not much more we can say.”
Wessex Investment Management managing director Kevin Bailey says: “This will have a huge impact on first time buyers but on the rest of the market as well. All first time buyers can do is pull their resources together with friends and parents. It will drive the rental market which will obviously increase the price of rent or else there will be a lot of 35 year olds living at home.”
Pearson Jones mortgage consultant Tim Robinson says the end of 100 per cent deals combined with the introduction of hips will have a big impact on market activity.
He says: “The introduction of hips has taken out the vendors and with no 100 per cent mortgages a whole bunch of perspective buyers have been shut out. It’s a big problem. Lenders have got rid of the catalyst that was triggering the bottom end of the market to move through and this will impact on everyone.”