Abbey confirms 100% launch

Abbey has confirmed that it will be returning to high LTV lending with the launch of a 100% product.

The lender has not been in this sector of the market since the early 1990s, and says the launch is “significant”.

The product, which is available to intermediaries and in Abbey branches from June 13, has no higher lending charges and is assessed on affordability.

Borrowers can take out the product on an interest-only basis on 85% of the product and pay capital repayment on the remaining 15%.

However, if a repayment vehicle is in place then the product is available 100% interest-only. The maximum loan amount is £500,000.

Rumours have abounded over the past few weeks that the lender was set to launch a 125% part secured, part unsecured product in a similar vein to products from BM Solutions, Alliance & Leicester and Northern Rock.

The June issue of Moneyfacts featured a column in which mortgage pundit Ray Boulger, senior technical manager at John Charcol, said a 125% launch was imminent.

However, Ricky Okey, managing director of Abbey for Intermediaries, says it decided to focus on 100% rather than 125% because it felt the former market had “plenty of legs to it.”

He adds: “We wanted to develop a product which helps people who are struggling to get onto the housing ladder.”

A 125% product could still be on the cards though. Okey admits that in six to 12 months Abbey will probably want to be in every market not currently covered – including sub-prime and equity release – but this view could change.