Mortgage lending has changed drastically since the economic crisis. There are now many more regulations in place to ensure that not only do lenders not overstep their ability to safely lend, but also borrowers are under scrutiny to make sure they don’t borrow more than they are capable of paying back – even if interest rates increase. Yet, recently Barclays took a step back into the lending days before the crisis and is now offering 100 per cent loans.

This riskier lending strategy has not been seen in many years. Such a loan requires no deposit by the borrower. Most mortgage and remortgage loans require at least a 5% deposit of the entire purchase amount and some require much more.

For the borrower to qualify for the 100 per cent mortgage, a guardian or family member must set aside a 10 per cent deposit amount in cash for three years in return for interest on the loan.

John Charcol’s Ray Boulger spoke of the lender’s new offering, “It is the first true 100 per cent mortgage since the financial crisis.”

Before the economic crisis, lenders were offering not only 100 per cent loans, but some would approve 125 per cent loans of the purchase price. Such aggressive lending led to the downfall of some lenders and years of difficulty for others.

For some experts, this move by Barclays is seen as a solution for parents that have been funding deposits for their children. They simply must set aside the money for a period of years and that lessens the risk of the 100 per cent loan for the lender. In turn, it helps the parents and the children that are becoming home owners. It basically takes a bit of the burden away from all parties.

It is not thought that this will become a trend among all lenders, but it does show that there are more creative ways being sought to help hopeful home buyers realize their ownership dreams.

There have been no reports of any return to the riskier remortgage strategies seen before the economic crisis, however there are still very low interest rates available to homeowners and most have adequate equity due to rising house prices to afford them the ability to get cheap deals.