Announcing the return of the 100% mortgage

The lender this week unveiled a new deal which will allow homebuyers to secure a loan without a deposit.

Until now, banks have required potential buyers to put up at least a 5 per cent deposit in order to be offered a mortgage.

The three-year deal from Barclays allows buyers to borrow at a fixed rate of 2.99 per cent without having to find that deposit.

The only catch is that customers need family or friends willing to put 10 per cent of the home’s value in a Barclays savings account for those first three years. At the end of that period the money is returned with interest of 1.5 per cent above the Bank of England base rate.

The new offer is part of changes to Barclays’ Family Springboard mortgage, which previously required a 5 per cent deposit. The changes also mean that buyers earning more than £50,000 can borrow up to 5.5 times their salary, up from 4.4 times previously.

The move is great news for young people looking to get on the property ladder but struggling with the time it takes to build up a sufficient deposit. It’s also good news for parents who are willing to help and now no longer need to wave goodbye to a significant chunk of their savings.

According to research from Barclays the need to find a deposit is the biggest barrier for many young people looking to buy their own home. The study found that 56 per cent of all young un-mortgaged individuals identified deposit issues as one of the key barriers preventing house purchase and for 28 per cent of first-time buyers it was the main barrier.

It also found that 35 per cent of young un-mortgaged customers expected their family to assist them with a mortgage.

A recent study by Legal and General revealed that parents are expected to help out with 300,000 property purchases this year, to a total value of £5 billion.

Raheel Ahmed, head of Barclays Mortgages said: “With over a third of young people still turning to their family for help with buying a home, we have increased the accessibility of the Barclays Family Springboard mortgage. We want to offer more people a way to get on the property ladder and to walk through the door of their first home earlier than they perhaps thought.”

100 and even 120 per cent mortgages were common before the financial crash but were scrapped after they were blamed by many for contributing to the troubles. They were said to have encouraged buyers to borrow more than they could afford to repay - leading to higher default rates - and contributed to soaring house prices.

With the requirement for family members to act essentially as guarantors, it’s hoped this new deal avoids the pitfalls of those previous products.