More Help Needed for First Time Buyers!

by Mark Johnston

More help needed for first time buyers!

It seems that currently first time buyers are trying to get on to a property ladder that has no rungs and many potential buyers are trapped in rental accommodation as they can not afford to access the property market.

The National Association of Estate Agents (NAEA) recently reported that the proportion of sales made to first time buyers dropped to a 7 month low in May 2012.

A report from the British Bankers Association (BBA) showed that mortgage approvals slumped to their lowest number in at least 15 years.

The Royal Institution of Chartered surveyors (RICS) has stated that one in five people who do try to buy are seeing their purchases fall through due to difficulties with mortgage finance.

However, one of Britain’s largest mortgage lenders has recently confirmed it is to lend billions to first time buyers by the end of the year.

In the first 6 months of 2012 Lloyds banking group has helped over 25,000 first time buyers take their first steps on to the property ladder and they have now pledged to help over 50,000 people to buy their first home by the end of the year.

Stephen Noakes, mortgage director at Lloyds banking group, said “it is important that we dispel some of the myths about first time buyer mortgages. Getting things right at the bottom of the ladder has an important knock on effect throughout the chain”.

While this is good news for first time buyers the Royal Institution of Chartered Surveyors (RICS) has also now calling for more help from the government for first time buyers.

The Legal and General Mortgage club is also behind any drive that will open up more opportunity for frustrated first time buyers.

The government recently introduced the ‘new buy’ scheme which allowed buyers to purchase a new build home with a 95% mortgage, backed by the developer and the government. However, many feel that the ‘new buy’ scheme could potentially lead to market distortion by reducing the demand for second hand properties.

What many experts now want is a scheme similar to the new buy but which is available for those buyers purchasing a second hand property. Such a scheme could either lend or guarantee first time buyers a reasonable deposit in return for a stake in their homes.

This in turn would free up stagnant chains and also provide the government and taxpayer with a clear return on investment.

Some similar schemes do still exist, but these are too fragmented and also lack the power needed to kick start the market.

Peter Bolton King, the Royal Institution of Chartered Surveyors (RICS) global residential director, said “we would like the government to consider a mortgage indemnity scheme that works for the whole of the market, not just new build”.

Experts believe that without allowing first time buyers better access to the second hand market, chains and transaction levels will definitely continue to stagnate.

 

 



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