by Mark Johnston
David Miles, a leading financial expert, has said he understood that “most people put great value on having a home but many will have to bury their dreams”.
A study has revealed that millions of families will have to save for more than 30 years to raise the deposit required to enable them to get on to the property ladder.
If potential buyers put away approximately £930 a year, it would take them 31 years to save a deposit of £28,750, which is now needed. By this stage, property prices could have climbed even further out of their reach.
In 1993, families had to save for just 8 years to raise a deposit for a mortgage to buy a house.
Rents have also rocketed in recent times, to an all time high in Britain. This means families who have been forced to rent are paying such extortionate prices that they have even less of a chance of saving for a deposit.
Paul Smee, director general of the Council of Mortgage Lenders (CML) recently said, “Many people will spend far longer renting than they ever imagined”.
A report published by the Resolution foundation think-tank showed how people are being ‘ripped off’ by ruthless, unregulated letting agents. For example:
The up front costs of renting a 1 bedroom flat, including deposit, letting agency administration fees and a months rent in advance, can currently total nearly £2,200.
A spokesman for the department for communities and local government added, “Excessive regulation of the private rented sector would push up rents and cut the range of available properties.
Many lenders have also stated that in October 2011 10% fewer home loans were given to first time buyers than in previous months.
According to the Council of Mortgage Lenders (CML) there were 44,500 mortgages advanced for home purchases in October 2011, a fall of 8% compared with September.
The average deposit on a typical first time buyers property has fallen from 40% in October to 31% in November, the lowest since August 2008.
Data from the Council of Mortgage lenders (CML) has shown that although first time buyers deposits have remained at an average of 31% over recent months, the monthly interest payments have continue to fall.
The continued low interest rates have helped to make monthly mortgage payments for first time buyers the most affordable for nearly 8 years.
Banks are now under intense political pressure to lend more to first time buyers, despite being under scrutiny on the amount of capital they hold. Therefore the banks have pushed out higher loan to value (LTV) mortgages over the summer to try to increase their market share, thus we begin to see a greater uptake of these mortgages after an initial lag.
It therefore seems that more first time buyers are ‘rolling up their sleeves’ and piecing together the deposit required to access these mortgages, no doubt sick of paying astronomically high rents.
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