My understanding is that the risk of a 100% mortgage is that if prices come down you're in negative equity. If you have paid 10% down you have a buffer from that happening.
Happy to stand corrected if that isn't the case
Speaking as someone who refused to take out a 100% mortgage on the grounds that it was fucking insane, and instead insisted on doing a minimum of 10% down in 2007 because it looked highly suspicious (and we had mates who worked on the stockmarket warning us) that there was about to be a crash in the market, yes you are correct.
Even then we ended up in negative equity for a number of years, even though we also over paid the mortgage. We figured, that the alternative would have been to rent for a few years and miss the opportunity to buy where we really wanted so thought it was six of one, half a dozen of the other if things went south. We just had to stay there long enough to turn it around.
We eventually sold for what we paid. 13 years later. Lots of other people who bought in the area at the same time were utterly screwed and competing against people who made a shed load of money on property down south.
We knew friends who had said 'the banks wouldn't lend us that much if we couldn't afford it' who we warned not to go down the 100% mortgage route. They promptly got into a world of financial pain.
The thing is, 100% mortgages and shared ownership only work if the market value of houses stays the same or steadily increases. If it doesn't, you get fucked. 100% mortgages and assisted buying schemes only work if interest rates don't suddenly hoink up. No one is stressing this enough at the moment, which they should be.
Atm one of the reasons house prices are continuing to go up, is because there aren't many people moving, so the supply of houses being restricted is pushing up prices.
If interest rates start to go up, all bets are off. A lot of people will struggle with that on top of other price rises. What happens is unknown really but the danger is certainly a load of people start to default on both rents and mortgages. The buy to let market is particularly fragile, with lots of people who have built up a portfolio based on a foundations in the sand. The potential for people to lose the lot scares me. If you get a load of repos and the market value of houses starts to falter. That doesn't mean its easier to buy a house as a first time buyer, so the banks tighten up on their lending rules and insist on buyers being able to demonstrate they have greater levels of affortability.
There might be opportunities for cash buyers - you know the people who have all the money to begin with. But if people can't pay rents, the rental market starts to lose high risk rather than such an easy way to make money. You have to have enough behind you, to be willing to play the long game and be willing to risk tenants defaulting.
I don't know whats going to happen in the coming months ahead, but that big cost of living crunch doesn't look like a good combo, and frankly I think you'd be off your fucking rocker to go for a 100% mortgage in that uncertainity. You might get lucky and be grand, but you also might get completely fucked.
The big issue is that affordability based on average wages has skyrocketed. There is a ceiling limit to how much people can pay on mortgages or rent. If you've got no more money or are maxed up on debt, you can't get more. Once you hit the maximum level that people have available to spend on housing, which I'd argue we are all to rapidly approaching, things don't look particularly nice.
Things definitely have a 2007 pre-crash vibe going on atm. Not the same as before, but there's a growing tension.