by Mark Johnston
More Mortgage Choice for First Time Buyers!
Having been punished for taking too many risks in the lead up to the 2008 financial crisis most banks have shown reluctance to lend at high loan to value (LTV), which are predominately know to be first time buyer mortgages.
This was due to the fact that this type of lending can represent a greater danger because lending at high loan to value (LTV) means property prices need only fall a fraction to push the borrower into negative equity.
David Hollingworth, a mortgage broker at London & Country, said: “For most of the last year first time buyers have not been the main focus for lenders keen to boost business. But now the drive to increase lending is finally starting bleeding through to them.”
Richard Sexton, director of e.surv, adds: “Last year the lending market was thorny for first time buyers. But over the last year, lenders have softened the process for them to get a house purchase loan.”
Therefore, following Government attempts to prop up the housing market through schemes such as New Buy and funding for lending it appears there is now evidence lenders are finally starting to open their doors to young couples making their first steps on to the property ladder.
It is still not easy to make the huge step from reluctant parental home dweller or renter to home owner, but newly available loans for those with 5 or 10 per cent deposits are helping.
Data released today by e.surv, the UK’s largest chartered surveyor, suggests the number of large loan to value (LTV) mortgages being approved is now at its highest level since September 2008.
The Bank of England’s Credit Condition Survey suggests lenders are planning to increase their lending levels to buyers with a 10 per cent deposit in the third quarter of the year.
Recent research has revealed that the amount of lending to first time buyers throughout the country increased strongly in the second quarter of this year.
The number of first time buyers increased by nearly a fifth in the first six months of 2013 according to figures.
It seems 120,000 people bought their first home between January and the end of June this year. This is the highest number since the first six months of 2007 when there were 181,500 first time buyers.
The Council of Mortgage Lenders (CML) this month reported an 8 per cent rise in loans given to first time buyers.
However this said getting on to the property ladder still remains a challenge for many people with house prices at a long term high when compared with average earnings.
The average property price paid by a first time buyer in the second six months of 2013 was 4.26 times average gross annual earnings, compared with an average of 3.23 over the past 30 years.
According to the latest data from Halifax, the ratio between house prices and earnings has grown for eight months in a row, thus making home ownership less affordable today than at any point in the past three year.
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