by Mark Johnston
Official figures have shown that around one million families and young people have been forced to rent rather than buy, over the past 5 years.
Realistically for most people it would be far cheaper for them to pay a mortgage than rent in today’s climate of high rental charges, however due to high deposit demands and tougher mortgage criteria restrictions it is near impossible to obtain a mortgage.
Charlie Bean, deputy governor of the Bank of England recently predicted that the number of first time buyers will drop even lower as lenders warn that low deposit mortgages are to become a thing of the past.
The council of mortgage lenders (CML) figures show that the number of first time buyers has already crashed from around 500,000 in 2000 to just 200,000 in 2010.
Housing minister, Grant Shapps said recently he was determined to ‘pull out all the stops to help those who do want to take their first steps on to the property ladder’.
Matt Griffths, from the first time buyer campaign group Priced Out said “mortgage lenders have led us in to a housing nightmare, with the ladder of home ownership being pulled out of reach”.
Government reports reveal the number of households who privately rent was 3.4 million in 2010.
Figures show that more than a quarter of private tenants currently seeking to buy are now in their 40s.
Therefore if theses people do manage to secure a mortgage it looks like they could become ‘OAP mortgagees, as they buy their first homes later in life. They will be faced with paying off their mortgages faster than the 25 year norm or having to repay the loan well in to their 70s.
A study conducted by insurance specialist Aviva found that one in ten home owners with a mortgage and over the age of 75 have an outstanding debt of around £72,500.
Trapped renters over the age of 40 could also face difficulty getting a 25 year mortgage term if it takes them beyond lenders retirement age criteria.
Some experts believe the momentum of the runaway rental ‘train’ shows little sign of slowing, with new tenants still looking to clamber aboard. However there are a limited number of properties to rent as existing tenants have limited exit opportunities and therefore stay put.
Paul Smee, the new director general of the council of mortgage lenders (CML) paints a picture of a country where people will rent for years, possibly their entire lives. This means a new generation of families will grow up in insecure rented accommodation.
This generation face the possibility of eviction at short notice, making it much harder to settle down and have stability.
In a nutshell many people may never achieve their dream of owning a home and renting is increasingly becoming the ‘new normal’.
Story link - Is Home Ownership Now Unrealistic?
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