On BBC Radio 4’s Today programme Natwest chair Sir Howard Davies said that it was not “that difficult” for people to get onto the housing ladder, adding that people “have to save, and that’s the way it always used to be”.
However, research from Yorkshire Building Society estimated that there were only 290,000 first-time buyers in the housing market last year, the lowest number since 2013.
Mortgage brokers said that the views did not reflect what they were seeing on the ground, with many first-time buyers struggling to save for a deposit due to the heightened cost of living and heightened house prices elevating deposit amounts.
Natwest chair’s comments ‘couldn’t be further from what we see’
Jack Tutton, director at SJ Mortgages, said: “His comments couldn’t be any further from what we see and hear from the first-time buyers that we speak to. These comments, unfortunately, show a clear misunderstanding of the struggles that people have when trying to get onto the property ladder, saving for a deposit was hard enough for many before factoring in the recent cost of living increases and rising interest rates.
“Without the ‘Bank of Mum and Dad’ or receiving inheritance, many people would never be able to get their foot onto the ladder. It is clear from speaking to our customers that more needs to be done to help first-time buyers.”
Stephen Perkins, managing director at Yellow Brick Mortgages, added: “It is tiring reading such comments from people who bought their first house for around £10,000 with a minimal deposit and a mortgage at two to three times their income and who are completely out of touch with the challenges first-time buyers face getting on the housing ladder.”
He noted that without help from the Bank of Mum and Dad or inheritance it was “incredibly hard” to save the £30,000 or so for a deposit, especially if they were privately renting as well.
“There are many reasons the average age of a first-time buyer keeps increasing, and it is not because young people do not want to save money or are lazy or careless with their money.
“It’s because the deck is heavily stacked against them without support. Sir Howard Davies should be ashamed of these comments, especially given Natwest needed support themselves and is still 38 per cent government-owned,” Perkins noted.
Scott Taylor-Barr, principal adviser at Barnsdale Financial Management, said that while affordability may not be as large a barrier, saving for a deposit was a “big issue”.
He noted that one lender was offering 100 per cent loan to value (LTV) mortgages in the mainstream market, and that had “caveats”, and that there were only one or two in the shared ownership space.
Taylor-Barr continued: “Many lenders do offer a five per cent deposit option, but five per cent of even a modest property is still an awful lot of money for people to save. Support schemes post Help to Buy are non-existent in the main, other than shared ownership which is not well publicized and is misunderstood or unheard of with many potential homeowners.
“If this is a market where getting on the housing ladder is “not that difficult” I would hate to see Sir Howard’s version of people struggling.”
A ‘couple’ of exceptions
Elliot Benson, owner at Sett Mortgages, noted that it may not be as challenging to secure a mortgage for couples buying together, noting that it was “rare” see a couple’s case declined unless there was adverse credit.
He noted: “The frustrations from first-time buyers that I hear more often is affordability when buying alone not being high enough for the desired property or the difficulty in saving with the cost of living currently.
“I have noticed more and more buyers moving back home to save and then buy as opposed to renting and then buying.”
Ross Lacey, director and chartered financial planner at Fairview Financial Management, added that one could argue that a first-time buyers could buy a property in certain parts of the UK for £100,000 or less with a 95 per cent loan to value (LTV) mortgage.
However, he said that “context is everything” and the “reality” was that it can take most first-time buyers time and help from family to save a deposit in an “area that’s viable for their work and lifestyle”.
“This is made even harder if they are also renting whilst saving,” Lacey noted.
Rhys Schofield, brand director at Peak Mortgages and Protection, said: “I think that with the right knowledge getting on the ladder is more achievable than a lot of people think.
“Some clients don’t know that they may only need a five per cent deposit or that it is potentially possible to get a 100 per cent LTV mortgage or even use a bank loan for deposit with some lenders if saving isn’t feasible. That’s why it’s always good to speak to a broker as early as possible to take some advice and guidance.
More 100 per cent LTV deals and government support needed
Lacey continued that more innovation at 100 per cent LTV mortgage products would “effectively replace what was being paid in rent with mortgage payments which would get more onto the property ladder, sooner”.
Richard Thompson, director at Abbeydale Mortgages, agreed that there should be an “increased support for 100 per cent mortgages tailored to first-time buyers”.
“In my view, the government should consider implementing a mortgage guarantee program for 100 per cent LTV mortgages,” he noted.
Matthew Jackson, director at Mint FS, added that more was needed from the government to support homeownership.
“There is a desperate demand for more affordable housing, shared ownership needs a revamp and relaunch and an updated version of Help to Buy would be welcomed,” he said.
