After all, no one is teaching anyone – more’s the pity – about the process of buying a first home and all the steps that need to be taken.
There will be a million and one influences on the prospective first-time buyer which is why there are professionals such as mortgage advisers available to support them through their journey, hopefully, into their first home.
However, a lot of these influences can be less than positive and may well mean the individual is, at best, reticent about what is achievable, or at worst, believe there’s no hope in hell of them being able to buy and they should give up immediately.
Again, here is where advice is so important because, quite frankly, some of the noises given off by our own industry are not exactly welcoming to first-timers.
Filtering through negative headlines
Take, for instance, house price levels at the moment. Pick up a paper, go to a website, and it will be there in black and white – prices have rocketed over the last year with the assumption being that this makes purchasing simply unachievable for vast swathes of consumers.
However, each case is different, each individual has different wants and needs, each one has a different financial situation – you cannot apply a uniform catch-all conclusion to the uniqueness of each first-timer.
Indeed, while the major indices outline these rapid rises in house prices, we have data from the Barclays’ first-time buyer index which suggests new buyers paid less in 2021 than they did the year previously.
Last year, according to the report, they paid an average of £281,900, whereas in 2020 this figure was £294,500. And the research also suggests the number of first-time buyers almost doubled in 2021 compared to the previous year.
Now, there are plenty of ideas around why this might be the case, but I would certainly suggest that access to high loan to value (LTV) mortgages has played a considerable part in getting more people onto the ladder.
In 2020, barely anyone was getting a first home with anything less than a 10 per cent deposit, which – on Barclays’ figures – would have meant close to £30,000 being required. In 2021 with five per cent deposit mortgages more readily available, the requirement dropped to just over £14,000.
Still a considerable amount to save but far more do-able than what was needed the year before.
For those who have not been fortunate enough to call upon on the Bank of Mum and Dad to support their ambitions for a home, we can’t overstate the difference this will have made.
Maintaining morale
Which is why it’s so important we continue to support those lenders who offer these mortgages and why we should plan and prepare for a time when, for example, the government’s mortgage guarantee scheme won’t be available. And that time is from 2023 onwards.
Now, the positive news is that the vast majority of lenders offering high LTV mortgages aren’t doing so as part of the government’s scheme, but what we don’t want to see is the confidence ebbing away from offering these loans as we get closer to its finish.
Hopefully, the evidence of the credit-worthiness of these mortgages will be there to see.
Certainly, we see lenders increasingly willing and able to use other types of credit risk mitigants like private mortgage insurance which should ensure high LTV products are available in the same numbers, hopefully more.
We can see the positive impact high LTV mortgages have had on the market – now it’s up to the industry to maintain these offerings to support the growing number of first-time buyers who should see that buying a property isn’t out of reach or as mystifying as they thought it was going to be.
