We all know that mortgage lenders took increasing risks as the housing bubble grew. But the extent of the lunacy is only now becoming clear.

Figures obtained by the Tories show that the number of first-time buyers taking out 100 per cent loan-to-value mortgages grew from just 1 per cent in 1997 to 10 per cent in 2007. (This is leaving aside the growth in bonkers products such as the Northern Rock 125 per cent deal).

Grant Shapps, shadow housing minister, places the blame on Gordon Brown for failing to insist on tighter regulation.

“The very first thing Gordon Brown did was to remove the power of the Bank of England to ‘call time’ on mortgage providers who over-lent,” says Shapps.

“Cash for a mortgage on a property worth as much or even more than the purchase price became easy to obtain, while Gordon Brown tried to reassure everyone that he’d personally put an end to boom and bust. Now the country is suffering the consequences of his boom time policy as millions find themselves in negative equity and unable to move home.”

This isn’t great news for the prime minister on the day that he inadvertently admitted that the UK was in “depression” for the first time. Or did he? Paul Waugh is not sure.

Estimated proportion of first time buyers, excluding sitting tenants, that took out 100 per cent. mortgages, in England

|———————————————————–+————-|
| | Percentage |
|———————————————————–+————-|
| 1997 | 0.94 |
|———————————————————–+————-|
| 1998 | 0.79 |
|———————————————————–+————-|
| 1999 | 0.80 |
|———————————————————–+————-|
| 2000 | 1.01 |
|———————————————————–+————-|
| 2001 | 0.82 |
|———————————————————–+————-|
| 2002 | 0.84 |
|———————————————————–+————-|
| 2003 | 2.38 |
|———————————————————–+————-|
| 2004 | 6.25 |
|———————————————————–+————-|
| 2005 | 6.77 |
|———————————————————–+————-|
| 2006 | 8.29 |
|———————————————————–+————-|
| 2007 | 9.84 |
|———————————————————–+————-|

February 4, 2009 5:56pm in Banks, UK economy, UK politics | Comment