For all too long now, first time buyers have had a mountain to climb before they can get their foot on the property ladder. When you compare this to the mole hill which it has replaced, you can’t blame the new generation of homebuyers if they feel a little hard done by.
After the economic crash, there was a period when most lenders were offering maximum loan to values of 85%, and with the dim outlook on the future, this didn’t look likely to change in a hurry. For many who had seen their friends or older bothers and sisters obtain a mortgage with little or no deposit, there was a feeling of how they wished they were born five years earlier, and despair at thinking that due to no fault of their own, they would never be able to get into a position which they could have been if it wasn’t for greedy bankers.
Now the dust has settled, the toxic lenders have disappeared and the responsible lenders are growing stronger. A competitive market is returning for the first time buyers. In the past year we have seen a great increase in the number of 90% mortgages, with interest rates falling as lenders battle for business. Even more recently 95% and even 100% mortgages have become more available. The 100% mortgages are very difficult to obtain, with only one lender who lends only in Northern Ireland offering true 100% mortgages with no need for a guarantor. Although I believe this is a good sign of things to come, I am not quite sure if we are ready, or if we ever will be ready for their return.
The things that excite me most are the 95% deals, which offer first time buyers a better chance, without giving mortgages away to everybody. Not only does it give an opportunity to those who are half way to saving their 10% deposit, but it shows those who haven’t seen the point in saving at all, that there is more hope for them, and that the time they need to save has been potentially halved.
Although 95% mortgages are now available through a handful of lenders, their return is still in it’s infancy, and criteria is going to be very strict until banks and building society’s have the confidence to start offering them in numbers and compete for business.
First time buyers are the lifeblood of the housing market, and if there is any way to get more people moving homes, it is to make sure they are there to give us the kick start we need.
If it is time for you to start thinking about buying your first home and you don’t know where to turn, it is worth contacting an independent financial adviser who can guide you through the mortgage maze and the whole house buying process. Kieron Bassett Financial Services has two Independent Financial Advisers. Contact us on (01524) 832057, via e-mail, info@kieronbassett.com, or visit www.kieronbassett.com.
Jason Hinde DipPFS
5th September 2011
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