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‘In some ways it has never been easier to get on the housing ladder’ – Phillips

by: John Phillips, operations director Just Mortgages and Spicerhaart
  • 22/03/2019
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‘In some ways it has never been easier to get on the housing ladder’ – Phillips
Not a day goes by without a story in the financial press about how hard it is for first-time buyers to get on the housing ladder.


According to calculations by Moneywise, on average, first-time buyers need to find a deposit of £33,000 to buy their first home.

Meanwhile research from Apropos by DJ Alexander revealed that first-time buyers are paying up to 60 per cent more to get on the housing ladder than they were just five years ago.

Overall prices for people buying their first house have gone up 40.6% in England, but in London, they’ve risen 52.5%, Manchester 53.7% and in Bristol, prices are up 58.9% in just five years.

The average first-time buyer home in the South West now costs £207,329 while in London, it is an eye-watering £419,608.

But, despite the huge increases in house prices and deposits, first-time buyers are still propping up the market.


Incentives have never been better

The latest UK Finance Trends in Lending report revealed that the number of new first-time buyer mortgages completed in 2018 was the highest since 2006, while according to the Halifax first-time buyers account for more than half of all mortgages.

That is the first time the mortgage market has been so first-time buyer dominated since 1995.

So why, when buying a house has never been so expensive, are we seeing more first-time buyers than we’ve seen in decades?

First, rent is so high – £932 a month on average – that young people are determined to get on the housing ladder rather than pay more out in rent than they would on a mortgage.

Second, incentives for first-time buyers have never been better.

Not only do we have stamp duty relief for first-time buyers on the first £300,000, but we also have the help to buy scheme, which since it launched in April 2013 has helped 158,013 first time buyers get onto the housing ladder.

In fact, it has been so successful that it has now been extended from its original deadline of 2020 until March 2023.


Specific products launched

We are also seeing the bank of mum and dad playing a bigger part. The current crop of first-time buyers have parents and grandparents who have, in the main, seen the value of their homes increase significantly in their lifetimes.

Many are now choosing to gift this equity to their kids for deposits, either by downsizing or via equity release, which has seen huge growth recently, both in terms of the products available and the value of the market.

Others are able to use savings and investments, including lump sums from pensions – enabled by the pension freedoms – to help their kids get onto the housing ladder.

And in fact, many lenders have even launched products specifically to cater for this type of gifting.

Lloyds recently launched its 100% ‘Lend a Hand’ mortgage where a parent or family member acts as guarantor by putting an equivalent 10% deposit into a savings account for the term of the mortgage.

So, despite rising house process, I think the first-time buyer is here to stay because while it has never been harder to get onto the housing ladder, in some ways, it has never been easier either.


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