The UK Government recently pledged to turn ‘Generation Rent’ into ‘Generation Buy’ with a review of the mortgage market. The aim is to help people to buy their first property against a backdrop of rising house prices and interest rates, a sharp spike in the cost of living and high deposit requirements – all of which are preventing many buyers fulfilling their dream of home ownership.
The current Prime Minister recently made a speech in which he announced that the government is looking at ways to help first-time buyers access low-cost finance including low deposit mortgages.
As part of his speech, Boris Johnson stated “First-time buyers are trying to hit a continually moving target. By the time they’ve put aside money to secure their mortgage, prices have risen and it’s no longer enough.
“And of course, the global rise in the cost of living is only making life harder for savers. So, we want it to be easier to get a mortgage. Reporting back this Autumn [the review] will look at how we can give our nation of aspiring homeowners better access to low-deposit mortgages.”
He also mentioned that over 50% of those who are renting a property in the UK can also afford their repayment mortgage, especially given the high cost of renting. However, out of that number only 6% could secure a typical mortgage as a first-time buyer due to lending constraints.
According to the recent House Price Index from Zoopla, monthly rental payments have gone up by 40% compared to a decade ago, whilst at the same time the average monthly mortgage payment has increased by just 11%. In addition, the average asking price of a starter home is currently £223,117 – this is 56% higher than a decade ago.
The review could take some time to complete so this isn’t a short-term lifeline for those looking to buy their first home now, but it does point towards a more positive outlook. If you are currently saving for a deposit and thinking of buying your first home, talk to us about the budget you’ll need and how things may change in the long-term should affordability rules change. Being able to confirm your budget can really help you to focus.
Every lender in the UK has a different way of calculating how much they are willing to lend their customers. This includes things like your expenditure, mortgage term, your debts, income, size of deposit, whether you are buying alone or in a couple and credit rating.
Call our team to get the latest advice on securing a first-time buyer mortgage on 01698 200050.