New Proposed Schemes for First Time Borrowers

New Proposed Schemes for First Time Borrowers

There is some great research published today which has indicated that 84% of MPs feel that their constituents' overall financial situation would be helped by a more fluid housing market. The MP's contacted indicated that the housing market could be stimulated by greater access to first time buyer mortgages according to Genworth Financial, a specialist insurer based in London

The seems a high level of agreement between MP's that first time buyers needed greater help to get onto the property ladder and this accords with our own experience. The majority of first time buyers are required to now have a significant deposit and many are reliant on parental support to raise this. The average costs of property prices in the UK has meant that first time buyers, even with a relatively good salary of 25-30,000 are unable to borrow more than 100 - 125,000 based on the affordability of a mortgage and the Government is being asked to introduce creative schemes to enable first time buyers to purchase property.

The housing market is built on a foundation that people generally are mobile in the housing market and the first time buyers of today are the terraced family house buyers of tomorrow, to be replaced by new first time buyers who may only be starting in employment in a few years. Without this movement, the property market becomes stagnant and if people can't sell their initial home to a first time buyer, they cannot purchase the next, which impacts the whole of the buying chain all the way up.

MP's in London gave an overwhelming response with 100% stating constituents needed more help as they face the most difficulty. As predominantly London based mortgage brokers we concur with this finding.

It is hoped that MP's of all parties will ensure that access to first time buyer finance is an important policy goal and that policies and incentives to promote this commitment will be introduced.

There has been talk of lenders offering higher loan to value mortgages requiring smaller deposits and then insuring the higher risk. The mortgage must remain affordable and suitable and the first time buyer will still need to prove the monthly mortgage payments can be made. This system however would give additional security to the mortgage lender as its only affordability decision making will effectively be cross checked by an insurer who would not take on the risk if strict criteria has not been applied.

Rob Killeen, business manager at Capital Fortune commented " This proposed scheme would be a creative and welcome mechanism to increasing the fluidity within the housing market, whilst at the same time protecting both the borrower and the lender. It is a return to the old days when lenders would insist on a mortgage indemnity guarantee which was so successful in boosting the housing market in the 1990's."

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