April Mortgages has shaken up the UK property market with the launch of a 100% loan-to-value (LTV) mortgage, allowing first-time buyers and movers to purchase a home with no deposit. This is one of the first true 100% LTV products since the 2008 financial crisis and is generating significant debate among buyers, lenders, and regulators.
Market Context
The return of 100% LTV mortgages highlights several ongoing market pressures:
Housing affordability crisis: Younger buyers struggle to save for deposits as property prices outpace wage growth.
Rising rents: In many areas, monthly rent now exceeds typical mortgage payments.
Stagnant wages: Earnings have not kept up with the cost of homeownership.
Lender competition: Banks and building societies are seeking growth in a crowded market.
April Mortgages’ new product specifically targets buyers who can afford monthly payments but lack family support for a deposit-a group often excluded from homeownership.
Product Snapshot
| Feature | Details |
|---|---|
| Minimum income | £24,000 (individual or household) |
| Minimum property value | £75,000 |
| Exclusions | Newbuilds and flats |
| Interest rate | Fixed from 5.99% (10 or 15 years) |
| Overpayments | Unlimited, no penalties |
| Early repayment | No charges for moving or redeeming from own funds |
| Rate reduction | Automatic as equity builds |
How Does This Compare?
While April Mortgages is making headlines, it’s not entirely alone. Skipton Building Society has offered a “Track Record” 100% mortgage for renters for the past two years, and Accord Mortgages has products requiring only a minimal deposit. However, April’s offering stands out for its flexibility and lack of a guarantor requirement.
Will Other Lenders Follow?
Most major banks are likely to take a cautious, “wait and see” approach. Expect:
Specialist and challenger banks to launch similar products within 3-6 months.
Larger institutions to test limited 100% LTV options, but with strict eligibility criteria.
Targeted products for specific groups, such as key workers or professionals.
Mainstream adoption will depend on default rates and regulatory feedback. The more lenders that follow, the greater the potential impact on the market.
What Are the Risks?
The fundamental risks of 100% LTV mortgages remain unchanged since 2008:
Negative equity: Buyers could owe more than their home is worth if prices fall.
Higher interest rates: Reflecting the increased risk for lenders.
Limited refinancing: With no equity, switching lenders or deals is difficult.
Financial vulnerability: Economic downturns could lead to distress or repossession.
Systemic risk: Widespread adoption could amplify market instability.
Expert View:
“April’s long-term fixed deals will give rate stability to buyers, whilst still enabling the rate to drop as they make inroads into the mortgage. The lack of tie-ins if there’s a later house move or chance to overpay also gives important flexibility.”
Pros and Cons at a Glance
| Pros | Cons |
|---|---|
| No deposit required | Higher interest rates (from 5.99%) |
| Long-term fixed rate offers certainty | Immediate negative equity risk if prices fall |
| Flexibility: no early repayment penalties | Excludes newbuilds and flats |
| Automatic rate reduction as equity builds | Limited refinancing options |
Market Signals
The launch of this product signals:
Lenders’ confidence in property price stability.
Intense competition driving innovation and risk.
Confidence in today’s stricter underwriting and stress-testing.
A willingness to test regulatory boundaries.
Pressure on regulators to balance stability and affordability.
Outlook
100% LTV mortgages could help thousands onto the property ladder, but only if robust affordability checks and regulatory safeguards are maintained. For borrowers, the appeal of homeownership with no deposit must be weighed against the risks of negative equity and higher costs.
Get Expert Advice
Considering a 100% LTV mortgage?
Speak to a specialist adviser at 1st Financial Foundations for tailored, independent guidance. Our experts will help you weigh the benefits and risks and decide if this innovative product fits your long-term goals.
Call 020 3897 8100 or email bhaven@1stff.co.uk for a no-obligation consultation.
This article provides general information only and does not constitute financial advice. For personalised guidance based on your specific circumstances, please contact our office to arrange a consultation. Learn more
