According to a new report, first-time buyers will have easier access to mortgages with lower deposits. Finally a glimmer of hope for those struggling to get on to Britain’s housing ladder.
Research on the amount of time it takes to save for a down payment on a home suggests buyers have been helped by the greater availability of first time buyer mortgage loans at higher loan-to-value (LTV) ratios. This is great news for some of our Nottingham clients, as this area is particularly hard to get a first time buyer mortgage in.
The estate agent Hamptons International said that it would take an average single first-time buyer 11 years and nine months to save a 15% deposit. But reducing the deposit to 10% cut the saving time to eight years and three months. For a deposit of just 5% the time to save was four years.
Hamptons highlighted Bank of England figures that suggest such deals with lower deposits have become more widespread in recent years. The proportion of loans made at a 90% or more LTV ratio was 5% in 2016, up from 3.8% in 2015.
Hamptons said that increasing availability of lending at higher LTV, combined with lower mortgage rates, had improved the ability to buy for first-time buyers. That cautious optimism over affordability chimes with other commentators on the housing market who have highlighted recent signs of cooling in price growth as good news for first-time buyers.
However, the estate agency cautioned that the fact house prices grew faster than incomes last year meant anyone going for a mortgage with a 15% deposit would have found it harder, not easier, to save for their down payment. The average length of time for a single first-time buyer to save a 15% deposit in the fourth quarter of 2016 was a whole year longer than in the fourth quarter of 2015.
“It still takes an average single buyer nearly 12 years to save a 15% deposit for their first home. That’s a whole year longer than at the end of 2015. But it’s not all bad news,” said Fionnuala Earley, residential research director at Hamptons.
E.surv report
A separate report from chartered surveyor e.surv found that buyers who put down a small deposit were making up an increasing share of the market.
Richard Sexton, a director at e.surv, said: “This is a trend which started at the end of last year and has continued into 2017. Likely buoyed by the number of government schemes and low mortgage rates across the board, small-deposit buyers are growing in strength in today’s mortgage market.
“A more first-time buyer oriented market is good news for all as new buyers help start chains and allow others to move up the housing ladder – vital for a properly functioning property market.”
If you are looking to purchase a property in Nottingham or Lincoln, and require a first time buyer mortgage, contact us today.
