Small deposit mortgages have been cast as inherently risky and a symptom of the cheap credit boom that led to the financial crisis.
However, while the Northern Rock’s 125 per cent mortgages – which wrapped up a home loan and extra borrowing on top – may have been a special kind of mortgage madness, buying with a small deposit was nothing new.
In fact, the generation of homeowners who bought their first properties in the 1980s and 1990s actually put down smaller deposits on average than those who bought through the 2000s and today’s first time buyers.
The average first-time buyer mortgage loan-to-value through the 1980s and 1990s was 94 per cent, Council of Mortgage Lenders figures show, whereas since 2000 it has been 85 per cent.