Skipton Building Society, the owner of Connells, is set to be the first lender to reintroduce 100% mortgages without requiring a guarantor, specifically targeting tenants. The move has prompted warnings about potential heavy debt burdens for some renters.
Skipton’s chief executive Stuart Haire explains that the society aims to “help those trapped in renting.” The new product, distinct from 15 other 100% loans already available, will include:
- 5-year fixed rate at 5.49% for a maximum term of 35 years
- Borrowing over 95% up to 100% loan to value for tenants
- Availability for tenants aged 21 and above
- First-time buyer purchases only
- £0 fees
Applicants will be subject to affordability and credit score assessments, and will need to provide evidence of a 12-month rental history with consistent payments. Skipton will ensure that monthly mortgage payments do not exceed the average of the applicant’s last six months’ rental costs.
Charlotte Harrison, CEO of Home Financing at Skipton, says the initiative addresses the UK’s housing affordability crisis and aims to help renters who struggle to save for a deposit or access family wealth. The “Track Record Mortgage” is designed with the unique challenges of “generation rent” in mind, taking into account potential risks and negative equity considerations.
No-guarantor 100% mortgages were once common but disappeared after the 2008 financial crisis due to stricter stress testing. The government has hinted at reviving the Help To Buy scheme for first-time buyers to encourage homeownership among younger people.
Despite Skipton’s efforts, Wayhome’s co-founder and CEO Nigel Purves warns that renters could risk taking on too much debt and facing negative equity if property values decline. He suggests that sustainable, accessible alternatives should be considered to address the housing crisis.