Since 2008, the market has lamented the decline of mortgages designed to help homebuyers without the means to put down a deposit of 10% to 15% of their property’s value.
We also recognise that affordability of monthly mortgage payments is often not the issue stopping these purchasers from buying their first home. Now, finally, we are seeing a range of finance options available to this market, but do enough buyers know they are out there?
Looking at what’s available, we have Aldermore, which launched its 100% Family Guarantee Mortgage earlier this year, Skipton Building Society with a 95% product and several lenders, including Nationwide and Northern Rock, providing mortgages of up to 90%.
Alongside these products, the government’s new build mortgage indemnity guarantee scheme will enable first-time buyers to borrow up to 95% LTV, while there are also various shared equity schemes on the market, including the government-sponsored FirstBuy.
A few years ago, when the mortgage market was at its peak, intermediaries could adopt the role of order-takers, as customers were plentiful. Times changed and anyone without a large deposit was effectively ruled out of the market.
This sector of potential customers has turned to the rental market, accounting for the current surge in rental demand, or had to stay living with parents. Unable to provide a large enough deposit, these customers-in-waiting have assumed they are locked out of the property market.
Our challenge as intermediaries is to make first-time buyers more aware of the options now awaiting them.
If we don’t communicate this, these customers will not know that these products exist. They are not walking through our doors, because they believe they are not able to obtain the mortgage they need.
As a large national agency, Connells is able to push out messages to a large pool of prospective purchasers via its database and estate agency network, but it doesn’t stop there.
All intermediaries need to get involved in educating first-time buyers on the availability of higher loan-to-value products.
If we really want to get the message across to would-be customers, it will take an effort by the entire broker industry.
Press comment in local newspapers, mailings to customer databases, advertising, and social media, all have a role to play and news such as the launch of MIG-backed mortgages will help raise the profile of higher LTV lending and the opportunities they provide to buy one’s own home.
It’s time for us all to start spreading the news that mortgages are available without the need to amass a small fortune.
Adrian Scott is mortgage services director at Connells
