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100% loans 'not that popular', Firstrung says

Deposit-free, or 100 per cent, mortgage are a "niche product" - meaning that their withdrawals by high street lenders will not make much difference to the market, it has been claimed.

The home loan products - which allowed the homebuyer to borrow the entire cost of their home without the need for an initial deposit - are now much rarer on the high street, thanks to the continuing credit crunch.

According to the first time buyers experts at Firstrung, however, 95 per cent mortgages were always the preferred choice among consumers.

These home loans - requiring buyers to put down a five per cent deposit - remain widely available among lenders.

Chief executive at Firstrung Paul Holmes said: "The media is trying to portray that people went out and had a hundred per cent mortgage on their property … they didn't.

"It was only five per cent of first-time buyers who went with [the hundred per cent-plus mortgage] anyway. It was never as popular as people made out."

He added: "It's so easy to criticise these products now they're gone. But, in fact, in a lot of instances, they were very good."

Lenders which have recently withdrawn their 100 per cent products include Northern Rock, Alliance & Leicester and Abbey.

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