First-time buyers REFUSED amid housing boom: Lack of mortgages forces HALF potential homeowners to suspend purchase plans
- Nearly half of first-time buyers say their plans to buy a home have been delayed
- One in five say they had to stop buying a home because of lockdown
- This is because the real estate market is booming for movers with larger deposits
The real estate market may be booming for some, but new research shows startups are lagging behind.
Prospective buyers looking to get up the housing ladder will have already seen the purchasing power of their savings diminish as an increase in new buyers has pushed home prices to record highs.
Additionally, after the lockdown, mortgage lenders were quick to pull high-loan value mortgages off the shelves, leaving only a handful of deals for borrowers without a large down payment to choose from.
As a result, nearly half of all potential startups have had to delay their plans for up to a year, according to new research from challenger bank Aldermore.
Almost half of the potential starters have postponed buying a home during the lockdown
This is Money recently revealed that a crisis at the bottom of the loan-to-value scale, possibly coupled with lenders’ uneasiness over taking on too many risky customers, has pushed rates up for those at the bottom of the market.
This is accompanied by the financial hardships that many in the country have already experienced.
This means homes are more expensive, finding a mortgage is more difficult, and rates are higher for the deals that remain.
As a result, one in two start-ups in the market are now concerned about their financial security and about 45 percent say they should make a larger down payment because providers won’t lend as much as before.
Many have also faced failed attempts to buy a home as a result of the lockdown period, with one in six failing to sell property and one in five saying they stopped buying due to lockdown.
Jon Cooper, chief of mortgage distribution at Aldermore, said: “ New buyers at the best of times experience strong financial and emotional challenges when buying a home, but it now appears that this has been amplified by the coronavirus.
Costly: The average cost of a home in Britain has increased to £ 224,123, according to Nationwide
The broader economic recovery will be the real determinant of how the market for first-time buyers performs this year.
“Buyers need job security if they want to take the plunge with confidence in what is one of the biggest financial investments of their lives.”
New buyers are running out of mortgages to choose from
At the start of the month, according to financial experts Moneyfacts, only 51 deals were available to those with a 10 percent down payment, instead of 772 before the lockdown was implemented.
In fact, before the lockdown, there was a booming mortgage market for borrowers with a down payment of just 5 percent, but these deals are pretty much gone, save for a few specialist options.
Lenders have usually blamed staff shortages, forcing them to keep new mortgage loans in check and focus on existing customers.
Lower deposit mortgages usually require more work to insure because they pose a higher risk to the lender.
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Lenders now have more control over their personnel issues, but are still operating at a much lower capacity than at the beginning of the year.
As a result, if staffing problems at banks and housing associations lead to deals being dropped, the high loan-to-value deals take the lead.
Lenders are also likely to be more cautious about who they lend money to while looking at how the economy is doing and what will happen to house prices in the next 12 months, given the prospect of a second lockdown and the leave plan. to end at the end of the month.