Lenders are asking for significant deposits for all types of homes First-time buyers ‘face big bill’
Lenders are asking for significant deposits for all types of homes Housing and lending bodies are facing government calls to lend to first-time buyers – but the UK’s major lenders are not at Tuesday’s summit.
Housing minister Grant Shapps has summoned various parties to “frank and open” discussions on difficulties for first-time buyers.
The government estimates 1.4 million households want to own their own home, but face a mortgage squeeze.
However, the major lenders were not specifically invited to the meeting.
The Council of Mortgage Lenders (CML) and the Building Societies Association – which represent lenders – are attending the summit.
Mr Shapps is expected to use the meeting to call on banks to offer more help to first-time buyers, such as creating new products specifically aimed at helping people get on the property ladder.
Figures show a downward trend in first-time buyer numbers throughout 2010.
There was a sharp fall at the end of the year, according to the British Bankers’ Association (BBA), although this was skewed by the rush to beat the end of the stamp duty holiday at the end of 2009.
‘Lenders were right to be careful’
Nearly three years ago, Adam Gannon, of Bolton, e-mailed the BBC to express how difficult it was to get a mortgage.
He had been saving for a year.
After buying his first home a year ago, his views have changed slightly.
“Saving up initially was the hardest part,” he said.
“But they [lenders] were right to be careful. They got themselves into a difficult situation in the first place because of what they lent out.”
First-time buyers are regarded as crucial to any housing revival, but many have only been able to get onto the ladder with financial assistance from relatives.
The average deposit required when buying a property was 23% in December, according to the BBA, up from 21% the previous month.
This has been partly the result of strict lending criteria from mortgage providers – including turning down potential borrowers with any blot on their credit history.
“We want to do more to help aspiring first-time buyers – the average age of the first-time buyer with no support from their family is now 37, and there are 1.4 million households who aspire to own a home but are simply unable to do so because of house prices and mortgage availability,” Mr Shapps said.
“So I am calling together key figures from across industry to discuss how we can tackle this problem. This cannot be achieved simply by top-down diktats from government – there will need to be a unified effort and creative solutions from across the board to make sure we do not lock young people out of the housing market.”
Extra help cannot come soon enough for Nick and Marie Smith. They had been renting a home for four years, while saving for a deposit.
Nick and Marie Smith have been trying to save up for a deposit The couple, who have two young children, realised that to raise enough money they needed to move in with Mr Smith’s mother in Wiltshire.
“It cannot be for ever. I would be nice to be together in our own home,” said Mrs Smith.
They were keen for Mr Shapps to demand that lenders loosen their lending criteria.
“They have got to do something about this level of deposit. It is just ridiculous. Nobody can save that level of deposit,” Mr Smith said.
“It does not just affect first-time buyers, it affects everyone up the chain. He [Mr Shapps] really needs to get something going and improve their lending.
“The banks should be working for us, not the other way around.”
Separate research from housing website Rightmove found that 23% of people who planned to buy a property in the coming year would be first-time buyers.
Generally, it is thought that double this proportion of first-time buyers is a sign of a healthy housing market.
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