Recent statistics released by the Council of Mortgage Lenders (CML) illustrate the restrictions inflated house prices and strict lending conditions are placing on a whole generation of first-time buyers trying to get onto the property ladder.
Figures suggest the average age of a first time buyer is now 29 with many individuals and couples struggling to save enough to put down a deposit on their first home. When they eventually come to purchasing their own home the average first-time buyer will on average put down a 20% deposit and have a total household income of £34,000. However, two thirds of first-time buyers rely heavily on their parents, borrowing money to fund a large part of the deposit.
Shining a light on the lack of available credit the most recent figures published by the CML relate to September of this year and show a 3.4% decline in the amount lent to first-time buyers compared with September 2011. They also show a 13.5% decline compared with August of this year however, it is likely this sharp fall will be largely due to seasonality in the residential property market – which sees transactions peak over the summer months and fall during the autumn.
It is estimated that in the UK 1.6 million people in their 20s and 30s remain living with their parents because they are unable to afford their own home. Despite the fact that owning our own home is now more difficult to achieve than it ever has been in the past, the majority of people still hold true the dream of owning their own home.
Commenting on the state of the residential property market Housing Minister, Mark Prisk, recognised that home ownership is “much more difficult to achieve than it used to be” and said “renting is likely to be a tenure in which most new households will spend at least some time.”
Whilst Government initiatives such as NewBuy and FirstBuy have been launched in association with lenders and developers to allow first-time buyers to buy their first home with just a 5% deposit, these seem to have had little impact. Further, the schemes have attracted criticism from some commentators. Whilst they allow first-time buyers to purchase a house with a smaller deposit, the mortgage is offered at a higher rate of interest leading to higher and sometimes unaffordable monthly repayments. Statistics from the CML show that on average, capital and interest repayments on a mortgage account for 20% of a first-time buyer’s income.
Holmes & Hills Solicitors has large team of conveyancers offering professional and fixed-fee conveyancing. Holmes & Hills offers conveyancing in Braintree, Sudbury, Halstead, Tiptree and Coggeshall.
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