MORTGAGE costs may have fallen in recent years but this has been of little help to first-time buyers who must stump up a large deposit before they will be considered by a mortgage lender.
Research shows first-time buyers who cannot raise a deposit from the ‘Bank of Mum and Dad’ are continuing to struggle to get on the property ladder.
According to the Council of Mortgage Lenders, only 36 percent of first-time buyers were able to buy their homes without any financial help from family and friends in the third quarter of 2011.
The average deposit required by someone buying a home without financial help is more than £26,000, double that needed in 2007, when 63 percent of first-time buyers bought without any assistance.
However, says housebuilder Bellway, this year first-time buyers have something to celebrate – namely the return of the 95 percent loan to value mortgage.
Announced by David Cameron and Nick Clegg late last year as part of the Government’s National Housing Strategy and specifically designed for new home purchasers, the 95 percent mortgage will be on offer from all the leading lenders and is expected to be priced at a competitive rate and the process should be the same as qualifying for a normal mortgage.
Bellway is confident that the scheme will dramatically improve prospects for first time buyers.
“Low interest rates have made mortgages more affordable for first-time buyers who typically spend about 12.3 per cent of their income on mortgage interest payments,” said, Maria Seed, sales director at Bellway Homes.
“However, this has been countered by soaring rents, the average rent in England and Wales is now around £720 a month which poses a significant challenge for first time buyers trying to save for a deposit. The introduction of the 95 percent loan to value mortgage is a real sea change for those people wanting their own home and adds to the appeal of a new home.”
In preparation for the spring launch, Bellway is asking customers to register their interest on their website now at www.bellway.co.uk.