100% mortgage is back via 'Bank of Mum and Dad'
Barclays has unveiled the first no-deposit mortgage of its kind since the 2008 crash, raising fears of a return to risky lending. Buying agent, Henry Pryor, has called the mortgage a “financial grenade" and suggested the Bank of England should use the powers it gained following the financial crisis to clamp down on the mortgage, warning that other lenders will be encouraged to offer similar loans. However, there is a twist to these new loans: now a family member or guardian must put 10% of the value of the property into a linked savings account. Parents are now becoming such an integral part of first-time buyers' finances that according to Legal & General, the "Bank of Mum and Dad" is now the tenth largest mortgage lender in the UK, expected to provide deposits for 300k mortgages in 2016, equating to around £5bn in loans and gifts. However Legal & General also warned that relying on parents might soon be unsustainable, as "families clearly cannot continue to use all of their net wealth to help their offspring onto the housing ladder without putting their own financial stability at risk," adding that "the Bank of Mum and Dad could soon start to experience a funding crisis of its own."

Experts and regular people with common sense can have criticized Barclays for offering a mortgage that does not require buyers to pay a deposit.

Analysts say that the 100% mortgage is “crackers” and will only encourage people to buy property that they cannot afford. The mortgage will allow first-time buyers and home movers to take out a mortgage without paying the normal 5% deposit, writes Hazel Sheffield for The Independent, under the great headline “Barclays’ first no deposit, 100% mortgage since financial crisis ‘will help people buy property they can’t afford'” which could only be better if he added “What Could Go Wrong”.

Barclays criticized by housing experts

Henry Pryor, buying agent and housing market commentator, has called the mortgage a “financial grenade.”

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“The premise is crackers. If this achieves the marketing hit that Barclays are after it’s a risky strategy because there are enough of us who remember who got us into the septic tank of financial crisis in 2008,” Pryor said.

Pryor expressed his surprise that the Bank of England has not clamped down on the mortgage using powers it gained after the financial crash, designed to help it prevent risky lending.