by Mark Johnston
Further Help for First Time Buyers.
Early last year it seemed that the list of challenges for first time buyers hoping to get on to the property ladder was getting longer rather than getting shorter.
However, figures showed that people taking their first step on to the property ladder made up a bigger chunk of the market in the final 3 months of last year at 42 per cent, compared with the long term average of 38 per cent.
Evidence has also shown that the number of first time buyers in the UK rose to its highest level in 5 years during 2012.
According to current data a total of £60,500 loans worth £7.6 billion was advanced to first time buyers in the last quarter of 2012.
Mortgage availability also soared to its highest level, last year, since the onset of the credit crunch nearly 5 years ago.
It seems then that lenders maybe finally opening their doors again to first time buyers.
Therefore, with increased competition in the market, boosted by the multi-billion pound funding for lending scheme, there is hope that things will improve further.
Paul Smee, the Council of Mortgage Lenders (CML) director general, has suggested that “first time buyers have benefited from the effects of better funding conditions”.
Banks and building societies advanced 21,700 loans to first time buyers in November 2012, which was worth around £2.7 billion and is an 8 per cent rise on the month before. Which is a further sign that the mortgage drought for new borrowers maybe beginning to ease.
It appears then that many lenders have now launched new innovative produces that have been designed to help aspiring home owners get a foot on the property ladder.
With savings rates currently at a low, many people having been looking elsewhere to invest their money, therefore some have decided to help their children get on to the property ladder.
Lenders seem increasingly more willing to use the so called ‘bank of mum and dad’ to lend at higher loan to values (LTV).
Therefore more lenders are introducing guarantor mortgages to their ranges.
A guarantor mortgage lets either a parent or relative assure a mortgage in the event the dependent fails to make the repayments.
Charlotte Nelson, of financial comparison website, moneyfacts.co.uk, said “guarantor mortgages have increased in popularity over the past few months”.
Some experts believe that for first time buyers having a guarantor can often mean that they are able to get on to the property ladder and also they can usually borrow more than the lenders would normally lend as the criteria for these particular mortgages are often less harsh.
Although, according to figures from the Council of Mortgage Lenders (CML) only 34 per cent of first time buyers in the UK were able to buy their home without any extra help last year.
All this said, Mark Harris, chief executive of mortgage broker SPF Private clients, states that “the mortgage market is still constrained when you compare it with what it was at the height of the housing boom”.
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