100% mortgages ‘a step too far’, says Virgin Money chief

Virgin Money chief executive Jayne-Anne Gadhia has warned that the return to banks offering 100% mortgages was a “step too far”.

Barclays has become the first high street lender since the financial crisis to start offering loans up to the full value of house purchases.

Instead of “Bank of Mum and Dad” putting up the lump sum deposit on a home, borrowers can be guaranteed by family members who put 10% of the house value into a savings account for three years.

“A 100% mortgage may sound very attractive but you could end up with more problems than it solves,” said Gadhia, who oversaw Virgin’s takeover of Northern Rock in 2011 following its nationalisation at the height of the financial crisis.

“Having bought Northern Rock, which did itself no favours from offering 100%-plus mortgages through its Together product, we are not going to start offering 100% mortgages ourselves,” she said. “We think it is irresponsible to offer them to customers and unsustainable for the business. It’s a step too far for the bank and for its customers.”

Gadhia also questioned Barclays’ timing so close to the referendum over the UK’s exit from Europe.

She said: “If there were to be a vote for Brexit, mortgage rates and credit card rates would go up. I personally as a customer, let alone as a banker, would want to be through the vote and have an idea where house prices and mortgages are going after that.”