First-time buyers 'shackled' to their mortgage

First-time buyers with 100 per cent mortgages may be forced to stay-put for up to three years, according to home insurance comparison website fool.co.uk.

With property prices rises slowing there is concern that buyers with 100 per cent mortgages may have bitten off more than they can chew.

The Halifax reported a reduction of house price inflation of 11.4 per cent to 10.7 per cent in August.

The fear is this that the spectre of negative equity – where property value is less than the amount the owner has borrowed – may trap them in their own homes.

David Kuo, financial analyst for the website, comments: "Borrowers on 100 per cent mortgages need to be aware that stagnant house prices may keep them shackled to their uncompetitive lender and prisoners in their own homes until prices rise again."

Interest rates remained steady this month but have been on an upward trend putting real pressure on homeowners, who also have utility bills, home insurance premiums and other costs to contend with.

05/10/2007 11:15:26