As house prices soar and mortgages disappear, the average-priced UK home must be put down to a minimum deposit of £33,000, so what can First-Time Buyers do?
As 2020 introduces us to a grim housing market report this year, showing prices surging above 2% in August alone (another painful record high), it was also greeted in some quarters as good news.
I am delighted to see two positive sets of market analysis this morning with property values reaching new heights, which is an impressive effort, which is all things considered.
Have you ever wondered if these people ever consider the plight of young workers toiling away paying high rents and having to save year after year for a deposit, while all the time prices escalate further out of reach?
However, there was bad news for First-Time Buyers, as they will no longer be able to get a 90% mortgage, but they will be able to find a 85% loan. HSBC was the last major bank offering low-deposit mortgages and has been overwhelmed with demand. But this means a buyer of the average-priced home in the UK must now put down a minimum deposit of £33,000 rather than £22,000 before.
I’m curious that banks are quitting the First-Time Buyer market. Why? The banks are awash of cash since the Coronavirus Lockdown.
The last time banks stopped supporting the first-time buyer market was in the financial crisis in 2007/08, when they had no money to lend. However, ever since Lockdown this year; the banks have had huge amounts of money no spent since everyone was at a standstill.
Going face to face with a wave of arrears and defaults when a mortgage holiday and furlough schemes are ending is too soon. Maybe banks think that if they lend 90% of the cash to buy a £250,000 home, if they have to repossess in a year or two’s time, they won’t get all their money back.
Nationwide still have a 90% loan-to-value mortgage at 3.24% however, there are lots of strings attached. You can only borrow for a maximum of 25 years, and you cannot just get your mum and dad to give you a deposit – the buyer must prove that they saved 75% of the deposit themselves.