OpinionMay 26 2015

First-time buyers doomed to rentals

twitter-iconfacebook-iconlinkedin-iconmail-iconprint-icon
Search supported by
comment-speech

Mortgage providers have made cuts to rates across their range of loans like it is going out of fashion.

In a further attempt to win new custom, many have resorted to add bells and whistles in the form of discounted product fees, free standard valuation and legals.

This is all great news for borrowers

Interestingly, mortgage lending fell in March by 6 per cent compared to the same month last year, according to the British Bankers Association –although this fall can be partly attributed to the general elections.

The overly cautious approach which was adopted by many lenders in the years following the financial crash of 2007/08 has slowly but surely dissipated.

Although mortgages at 100 per cent LTV are unlikely to make a return any time soon, more and more lenders are offering loans up to 90 per cent LTV which, again, is great news for first time buyers with tiny deposits, looking to get onto the ever elusive property ladder.

However, house price is on the up, and is showing no signs of slowing down. There was a 9.6 per cent increase in UK house prices in the year to the end of March, according to figures released by the ONS.

Borrowers are often encouraged to save up for a bigger deposit to secure a better rate on their mortgage. However, many face an up-hill battle to save enough to keep up with the accelerating cost of properties.

The government has tried its hand to help people onto the property ladder through help-to-buy, but there are all sorts of well documented problems with the scheme – high rate of interest for example.

While the industry and the government appear to be making an effort to help people on to the property ladder, current circumstances deem those who aspire to become first-time buyers are restricted to renting – at least for the short term.