Posts tagged ‘first time buyers’

Young people unwilling to make sacrifices to get on property ladder

The attitude of young people towards renting is changing as many find themselves priced out of the property market, a study showed today.

Renting 2

There has been a marked shift in the opinions of 20 to 45 year olds towards homeownership, with many now accepting that renting enables them to live in a property they would either not be able to afford to buy or would have to make years’ of sacrifices to do so, according to Halifax.

The trend represents a marked shift from when the research was first carried out in 2011, when young people wanted to buy a home, but either could not afford to do so or dared not try to for fear of being rejected by mortgage lenders.

But the latest research found that one in five 23 to 27 year olds claim they have no desire to own a home, while 46 per cent think Britain is becoming more like Europe, where renting is the norm.

Young people are also increasingly unwilling to make the sacrifices necessary to get on to the property ladder.

The study found that 86 per cent of potential homeowners refused to sacrifice the quality of accommodation they currently lived in to help them save more towards a deposit.

At the same time, 54 per cent were not prepared to make other sacrifices to get on to the property ladder, and 57 per cent would not compromise on the quality of the first home they bought.

Craig McKinlayCraig McKinlay, mortgages director at Halifax, said: “With attitudes softening towards the social implications of renting, and the number of people who say they will never own a property increasing, we may be heading towards the point where the aspiration to own a nice home will be replaced by the aspiration simply to live in one.

“It seems that people are now beginning to accept a lifetime of renting and this would not only change the way the property ladder looks in the future, it could even bring into question whether or not it will exist at all for some people.”

But 40 per cent of people still said they did not want to raise children in a rented property, and 51 per cent worried that renting would have a negative impact on their retirement, although both figures were lower than last year.

Halifax also pointed out that the average cost of renting a home in the UK was now £1,488 a year more than owning one.

It added that the availability of 95 per cent mortgages had increased significantly during the past year, while schemes such as the Government’s Help to Buy should make it easier for people to get on to the property ladder.

Mr McKinlay said: “Researching the market and accessing the support that is available for first-time buyers could make a real difference in realising the dream of owning your own home.”

The plight of first-time buyers has not been helped by recent strong gains in house prices, which have left the average home in England costing £259,745, according to Zoopla.

The Office for National Statistics also recently reported that house prices in the UK had reached a new record high.

Halifax questioned 8,026 20 to 45 year olds and 1,005 parents online between February 14 and 23.


April 18, 2014 at 8:00 AM Leave a comment

Eight properties that first time buyers can afford

First time buyers can typically afford to buy a property worth £130,000, limiting them currently to a choice of less than 1,500 detached houses for sale in Britain.

First time buyer 2

Latest figures from the Council of Mortgage Lenders suggests the average loan size for first time buyers is £119,000, based on the national average salary of £26,500.

The calculation behind what properties such buyers can afford is based on them typically borrowing around three times their gross income, and a minimum deposit of 5 per cent.

It follows the Royal Institution of Chartered Surveyors suggesting this week that many middle-income families will soon be frozen out of a frenzied property market.

Here are eight houses with an asking price of less than £130,000:

1. Three bedroom detached house in Pontefract for £125,000

11.04.14 First 5

2. Two bedroom detached house in Margate for £115,000

11.04.14 First 6

3. Three bedroom house in Brimingham for £129,950

11.04.14 First 1

4. Three bedroom detached house in Stoke-On-Trent for £125,000

11.04.14 First 2

5. Three bedroom detached house in Nottingham for £115,000

11.04.14 First 3

Two bedroom detached house in Bungay for £95,000

11.04.14 First 7

Two bedroom detached house near Baschurch for £129,995

11.04.14 First 8

Three bedroom detached house in Bradford for £115,000

11.04.14 First 4

April 11, 2014 at 11:48 AM Leave a comment

[Updated] Mortgage lending to first time buyers rises 50%

Mortgage lending to first-time buyers soared by more than 50 per cent during February as people continued to return to the property market, figures showed today.


A total of £3.1bn was advanced to consumers buying their first home during the month, in line with January’s figure, but a massive 55 per cent higher than in February 2013, the Council of Mortgage Lenders said.

There was also a 38 per cent year-on-year increase in lending to homemovers as demand for property remained strong.

Overall, a total of £7.8bn was advanced to both homebuyers and those remortgaging.

This was slightly below the £7.9bn lent in January, but 47 per cent ahead of the total for February 2013, as the recovery in the mortgage market continued.

Paul Smee, director general of the CML, said: “We would expect a seasonal lending dip around this time of year.

Paul Smee

Paul Smee, director general of the CML

“However, lending to both first time buyers and home movers bucks this trend, continuing to show momentum.

“The substantial year-on-year growth shows how far the market has moved since the flat period experienced up until around a year ago.”

The typical first time buyer borrowed 3.4 times their gross income during February.

But low mortgage interest rates meant they spent just 19.2 per cent of their income on mortgage repayments, only slightly up on the recent low of 19.1 per cent seen in November 2013.

The typical amount borrowed by those buying their first home fell slightly to £119,000, compared with £119,735 in Janaury, while average incomes were also marginally lower at £35,297, down from £36,408.

But despite strong lending to those buying a property, remortagging activity was more subdued.

A total of 23,800 loans were advanced to those remortgaging, less than half the 48,400 that went to those buying a home.

Remortage loans totaled £3.5bn in February, 17 per cent lower than January’s figure but still 30 per cent up on the same month of 2013.

Buy-to-let lending was also lower than in January, although lending by both volume and value was up on February 2013.

Mr Smee warned that lending may fall when the Mortgage Market Review comes into force at the end of this month, given the magnitude of the changes the industry faced.

But he added: “Overall, we expect to see continuing growth in mortgage borrowing ahead, within responsible lending parameters, as the pent-up demand of the recession years finds an outlet in a stronger market.”

The figures come as the Royal Institution of Chartered Surveyors said property sales jumped to a six-year high during the first quarter of the year as buyers continued to return to the market.

But the group warned that the supply of new homes being put up for sale remained low after the predicted ‘spring bounce’ had failed to materialise, with new instructions falling for the third month in a row.

It said the ongoing mis-match between supply and demand would put further upward pressure on prices, with surveyors expecting annual house price inflation to average 6 per cent per annum during the next five years.

Recent strong gains have left the average home in England costing £259,745, according to Zoopla.

But despite rising house prices there are few fears that the property market will be stoked by irresponsible lending practices.

Mark Harris, chief executive of mortgage broker SPF Private Clients, said: “Any fears that borrowers will be tempted to overstretch themselves can be allayed by the introduction of the Mortgage Market Review.

“Processing times for mortgage applications are likely to increase as a more forensic approach to expenditure is adopted but it should result in a more sustainable mortgage market.”









April 10, 2014 at 10:10 AM 1 comment

Help to Buy equity loans provide £600m helping hand to home buyers

Home buyers using the Help to Buy scheme are being given a foot up the property ladder to the tune of £600m, despite growing concerns about a house price bubble.


The latest figures from the Government, published today, show the true extent of how the taxpayer is subsidizing the scheme and has led to concerns it is fuelling the increase in house prices.

Help to Buy was launched amid a fanfare by Chancellor George Osborne almost a year ago in the last Budget to help those with a small deposit to buy a home.

But the popularity of the equity loan scheme, which includes an interest free loan of up to 20 per cent of the value of a property, comes amid fears about the property market overheating.

The cash means home buyers can purchase higher priced properties they may not otherwise be able to afford, and mortgage experts suggest the taxpayers’ funds may be better spent elsewhere.

Jonathan Harris, of mortgage brokers Anderson Harris, said: “It is crystal clear how important the housing market is to the overall economic health of the country when the Government is handing out such significant subsidies to buyers.

“The idea is that we all benefit when the housing market is operating efficiently, with the knock-on effect being felt by estate agents, mortgage brokers, surveyors, solicitors, lenders, builders, and removals firms.

“However, £600m is a lot of money and one wonders whether it could be better spent elsewhere.

“The Government might be better off ensuring that enough homes are built to keep properties at realistic price levels rather than further fuelling house-price inflation in this way.”

A total of 14,823 properties were bought during the first 10 months of Help to Buy equity loans, according to the Department for Communities and Local Government.

The average price of a home purchased under the scheme was £184,000 , with the average equity loan of £36,599.

The majority of home purchases in the Help to Buy equity loan scheme were made by first time buyers, accounting for 89 per cent of total purchases.

The figures do not include the Government’s second phase of Help to Buy, which was launched at the beginning of October last year, with the mortgage guarantees coming into force at the start of this year.

February 27, 2014 at 11:13 AM Leave a comment

Buying beats renting in 94% of UK towns

Renting now 15% more expensive than owning on average across Britain

Our latest research shows buying a property is more cost-effective than ever compared to renting, however many potential buyers aren’t able to take advantage because they can’t access mortgage finance. The shortage of financing, especially to first time buyers, has pushed demand for rental property through the roof. But for those lucky enough to be in a position to get a mortgage, there may never have been a better time to buy.

Our latest Rent v Buy Index shows:

  • Buying property more attractive than it has ever been compared to renting
  • Renting now 15% more expensive than owning on average across Britain
  • Swansea, Plymouth and Bournemouth only places where renting rules
  • Renters in London pay £6,888 p.a more on average than homeowners

High rental demand, due to the difficulties would-be buyers face in getting financing, coupled with low mortgage rates has made buying property in Britain more attractive today than it has ever been in comparison to renting. Buying now beats renting in 47 of the 50 largest towns across the country, according to our latest analysis.

The figures also show a significant increase on this time last year, when it was better to buy than rent in only 40 out of the same 50 towns. The continued mortgage drought and the rising demand for rental properties has led to renting now costing 15% more on average than buying, up from only 10% more this time last year.

Swansea, Plymouth and Bournemouth are the only 3 locations on the list of 50 towns where it remains cheaper to rent than buy today. In contrast, Milton Keynes comes top of the list of locations where buying beats renting and where renting is 36% more expensive than owning, leaving renters £2,436 per year worse off on average. Warrington and Walsall also feature highly on the list of locations where it is cheaper to buy than rent, at 33% and 32% rental premiums respectively.

In London, where the average asking price for 2-bedroom flats currently stands at £442,036, buying also trumps renting by a big margin. With average monthly rents in the capital at £2,416, renting is 31% more expensive than the cost of ownership, leaving renters paying an extra £6,888 annually on average compared to owners.

Full list of the top 50 rent/buy locations

To compare the cost of buying versus renting, Zoopla analysed the current asking prices and rents of over 78,000 two-bedroom flats currently on the market, comparing the rental cost to the cost of ownership based on servicing an interest-only mortgage at 5% p.a.

Locations where renting rules over buying

Rank Location Avg. Monthly Rent* Avg. Asking Price* Rental Discount**
















  • Source:
  • * Based on 2 bedroom flats on the market for sale/rent in November 2011
  • ** % variance between monthly rent and interest-only mortgage payment at 5% pa

Top 10 locations where buying beats renting

Rank Location Avg. Monthly Rent* Avg. Asking Price* Rental Discount**


Milton Keynes

















































  • Source:
  • * Based on 2 bedroom flats on the market for sale/rent in November 2011
  • ** % variance between monthly rent and interest-only mortgage payment at 5% pa


  • Mortgage payments are calculated assuming a conservative mortgage rate of 5% p.a. to provide an effective comparison to renting.
  • We use an interest-only mortgage rate in the comparison as the interest on a mortgage is the effective cost of financing living in that home.
  • We assume a 100% LTV ratio to do a fair and simple comparison of the cost of financing versus the cost of rent.

December 15, 2011 at 3:47 PM 5 comments

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