moneysupermarket.com: Alliance & Leicester 125 per cent PlusMortgage

Commenting on the launch of the Alliance & Leicester 125 per cent PlusMortgage, Louise Cuming, head of mortgages at price comparison website moneysupermarket.com, said: “It is great to see that A&L is spicing up the first time buyer market with the launch of its PlusMortgage.

“Despite the fact the Citizens Advice Bureau and the National Debtline have criticised the product for rendering borrowers into negative equity from the start, I believe A& L is acting with full responsibility in bringing this product to market. Firstly, the product will only be sold via brokers and therefore borrowers can only access after a stringent advice process. Secondly, A&L is only targeting people with the propensity to take on this large amount of debt – and, in fact, lenders have historically seen lower percentage arrears in the 100 per cent plus market versus the 95 per cent sector. Finally, because the product is fixed it offers borrowers the extra peace of mind of knowing what they are going to have to pay back each month.

“It’s not surprising to see another lender join the 100 per cent plus market when first time buyers continue to find it increasingly tough to get a foot on the housing ladder. Northern Rock Together Product launched the first 100 per cent plus mortgage in the late 90’s and by 2000, the average house price was £81,600, with the average first time buyer needing 2.42 times their income to get onto the housing ladder. Now, as a fourth major lender launches this type of product, the average house price has leapt up to £172,865 and first time buyers need to stretch to at least 3.21 times their income. If prices continue rising, it will not be surprising to see more lenders join the party.”