The 100 per cent mortgage is back – but it isn’t enough to help homebuyers

Renters rejoice? The Skipton Building Society says it is riding to your rescue with the first “clean” 100 per cent mortgage in what seems like ages.

I say clean in that it doesn’t require a guarantor – in contrast to the small number of such products currently available on the market. That is its USP.

Trumpeting the launch, the society has produced figures to show that there are now 4.6 million households renting privately across England, more than double the number recorded in 2001.

It has also highlighted the results of a survey it commissioned which shows that eight in 10 renters feel “trapped” in a vicious cycle – high bills serve to prevent them saving for a deposit to secure a mortgage.

According to the most recent figures put out by property website Zoopla, rental costs are up by 11 per cent, or £1,120 over the last year. That comfortably exceeds the increase in private sector wages (6.9 per cent excluding bonuses according to the Office For National Statistics). The housing market has slowed some. By how much depends on whose figures you use. There are a variety of surveys and the most recent of those, from lender Halifax, showed prices in April were just 0.1 per cent higher than a year ago and were 0.3 per cent below the numbers recorded during March.

But, just because house prices have slowed doesn’t mean the cost of buying a home has necessarily fallen. Rising interest rates have pushed up the cost of a mortgage. Liz Truss did her bit too, although the fallout from her economic vision has died down lately.

The shortage and price of private rental properties has understandably fuelled an increase in buying. What Skipton calls its “Track Record” mortgage plays into that.

The building society says it is designed to help those who would like to get off the rental treadmill, but who lack the capacity to save for a deposit. And who may also lack the facility to call upon the Bank of Mum and Dad to play the role of co-underwriter.

However, Skipton’s deal comes at a price. The average cost of a five-year fixed mortgage is 5.03 per cent according to Moneyfacts, the financial data group. Skipton’s latest is priced at 5.5 per cent.

The building society’s assessment will be linked to the customer’s outgoings in rent. Someone who has shelled out £1,000 a month over the last year, and paid promptly, will be able to take out a mortgage that comes to the same cost or less.

“We need to tackle the UK’s housing affordability crisis to enable more people, especially renters who are trapped in renting cycles, to buy their first home,” trumpets Charlotte Harrison, CEO of home financing at Skption.

How many people this will actually assist is, however, open to some debate. As for tackling that affordability crisis? Moneyfacts finace expert Rachel Springall had this to say: “Even if we were to see more innovative deals surface, affordable housing is very much in short supply, and there needs to be significant changes to the market to turn this around.”

Springall is right there. Deals, however innovative, aren’t going to do anything more for the lack of affordable supply than the previous government’s interventions in the market such as the “Help to Buy” scheme. That scheme saw the government help to underwrite 95 per cent loans.

The thing that will help is increasing the supply of new properties coming to market. That is, obviously, where things get a little more complicated.

True, housing (and the lack of it) has been working its way up the political agenda – a feature of the recent local election campaigns in some areas. But more is required. Getting new homes built is where the need for innovative solutions is most pressing.