MortgagesAug 17 2016

London first-time buyers terrified by mortgage process

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London first-time buyers terrified by mortgage process

Londoners are the most confused and stressed about mortgages in the UK, with 65 per cent of first-time buyers in the capital claiming the prospect of applying for a mortgage “terrifies” them.

Digital mortgage broker Habito commissioned YouGov to survey 4,236 adults in May, of which 1,258 were mortgage owners and 33 had a mortgage through shared ownership.

It found a lack of trust in professionals and the market is preventing millions from securing an affordable mortgage deal.

The research showed 42 per cent of first-time buyers chose to seek advice from friends and family, with only 4 per cent opting to trust a mortgage broker.

Four out of five respondents said there were too many mortgage options available, stating they were “overwhelmed” by the process of applying and that they found it one of the most stressful experiences of their lives.

This response was the most extreme in London, with first-time buyers needing an estimated 15 per cent deposit to cover the additional costs of stamp duty.

The survey also suggested a widespread lack of understanding among first-time buyers about how the mortgage application process works, with 57 per cent thinking applying for a mortgage was too hard, but were reluctant to seek professional help at the outset.

Daniel Hegarty, chief executive and founder of Habito, said post-Brexit “fearmongering” has just made the landscape more confusing for homebuyers.

“Whilst we’re in for a bumpy few years as the market finds its feet again, interest rates are at historic lows, so now is a great to time to be looking at your mortgage options,” he stated.

“The real problem is that people are afraid of their finances and finding the right mortgage product is like finding a needle in a haystack. But it’s time to stop burying our heads in the sand, as the experience doesn’t have to be terrifying if we’re willing to take control of our finances.”

Official house price data yesterday (16 August) found London continued to have the highest average house price at £472,000 - although the east of England replaced London as the region which showed the highest annual growth.

peter.walker@ft.com