As the number of First Time Buyers drops in September and Help to Buy is faces its final curtain, should banks and building societies be picking up the slack to help generation rent onto the property ladder?
There were 29,400 new first-time buyer mortgages completed in the month, according to UK finance, some 4.5% fewer than in the same month a year earlier.
The £5.0bn of new lending in the month was the same year-on-year. The average first-time buyer is 30 and has a gross household income of £42,000.
Jackie Bennett, Director of Mortgages at UK Finance said, “Demand for house purchases for both first-time buyers and homemovers has also lessened, as affordability constraints continue to bear down on consumer demand for new loans particularly in London and the South East.”
Meanwhile, a new report has revealed that nine in 10 (87%) building societies expect the ‘Bank of Mum and Dad’ to play an increasing role in helping first-time buyers over the next 5-10 years.
70% of the public see the difficulties young people have buying a home of their own as one of the biggest issues the country faces. However, many also believe that both lenders and the government could do more to help.
The report found that 86% of people want to own their own home. In 2017 there were 360,000 first time buyers. The baseline number of new first-time buyers every year should be nearer 450,000. The ability to buy is increasingly concentrated on dual-earning households and those with higher incomes.
More than half (59%) of aspiring first-time buyers expect the ‘Bank of Mum and Dad’ to support them onto the housing ladder.
Product innovation in this market is starting to increase the options beyond straight gifting: 59% of building societies will accept a deposit from family members as security; 33% will accept a charge over the property of family members to ease affordability barriers and 10% offer family offset mortgages.
Report co-author Bob Pannell said, “Our young people face huge challenges in buying their first homes. Families instinctively want to help, and it’s the job of lenders, regulators and government to ensure that they have more opportunities to do so in a sustainable way.”
Robin Fieth, BSA Chief Executive said, “Home ownership remains a fundamental ambition for the majority of people. Against the challenging backdrop of high prices, a woefully inadequate supply of homes and a growing intergenerational divide, new ideas and strong debate are essential. Family help – the so-called ‘Bank of Mum and Dad’ – is great for those fortunate enough to have this option, but innovations in underwriting could help all potential first-time buyers.”
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