The latest Halifax report into homeownership shows that whilst enthusiasm and the aspiration to own remains as strong as it was 60 years ago when the Queen took the helm of this great nation, the stark reality is much more subdued.
Two thirds (65%) of today’s 20-45 year olds can be called ‘Generation Rent’, a group with no realistic prospect of owning their own home in the next five years and with no sense of the long-term saving mentality that they would need to buy their own home.
They say they either cannot get on the housing ladder (40% of non homeowners) or they do not wish to own their own home (25% of non homeowners).
Despite a clear desire to own a home of their own, many young people are not taking the steps they need to if they are to make these dreams a reality.
Our research showed us that just one in three (31%) has a realistic plan to buy a home within the next 5 years.
The size of a deposit, high house prices and job security are the top three barriers to home ownership according to Generation Rent.
The feeling that it is difficult, if not impossible for first time buyers to obtain a mortgage can partly be explained by the widespread belief that banks do not want to engage with first time buyers or approve their mortgage applications.
Two thirds (68%) of 20-45 year olds think there is “a general perception that everyone is rejected by lenders and there is little point in applying”. This view is less common among parents, though a majority (59%) still think it puts first time buyers off applying.
Despite the launch of various initiatives which include support for first time buyers, such as NewBuy, both young people and their parents share a view that it is difficult, or even impossible, for first time buyers to get a mortgage, which this is clearly a point we need to continue to address.
There are clear gaps between people’s perceptions of the current mortgage market and reality. The reality is we continue to approve eight out of 10 first time buyer applications, more than double the amount that people expect us to.
The findings of the report highlight the growing importance and the critical nature financial education.
With such a diverse range of mortgages available, both lenders and brokers have a really important part to play in supporting and advising borrowers looking to buy their first home.
There’s no silver bullet, but education is key and that’s where brokers have an important part to play.
Mike Jones is director of intermediaries at Halifax
