He explained: “The biggest issue with this type of borrowing is that you need to be very careful about whom you lend to. The credit score should be, quite rightly, tight with only those able to demonstrate good financial management making the grade.”
A counterargument to the concept of zero-deposit mortgages making the property market more accessible could be an influx in demand, which could potentially send house prices soaring.
Mr Roberts said: “If hundreds or thousands more people suddenly have the ability to get a mortgage that didn’t have before, that is going to create even more demand on what is a supply-constrained UK housing market, and a result of that could be significant house price inflation.”
He added: “I think the regulator will have that in mind. It tries to create opportunities for people that need them, but it also tries to keep a cap on it as well.
“What the regulator will be looking to do is find a balance where we can welcome these really positive ideas and innovation, but also just make sure that we then don’t have unintended consequences of house price inflation.”
Another prospect floated is the concept a zero-deposit mortgage could send a borrower into negative equity. This refers to the instance when a property is worth less than the mortgage taken out on it, which can make it hard to move house or remortgage.
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