First Time Buyers Alone Will Not Save The Home Owner Loan Market
The housing and home owner loan markets in the UK have been particularly subdued ever since the credit crunch hit, back in 2007 and even now, there is very little sign of improvement in this sector of the loans market.
In recent months, there has been a growing focus on providing home owner loan products which are suitable for first time buyers and are designed to encourage them to enter the housing and home owner loan market whilst interest rates on loans are low and with reduced deposit requirements.
But Paul Broadhead of the Building Societies Association (BSA) has warned that offering loans to first time buyers exclusively, will not be enough to give the home owner loan and mortgage market the boost it needs to recover fully.
Although he acknowledges the fact that first time buyers are vital to the growth of the housing and home owner loan markets, Mr Broadhead said that other sectors of the market were being neglected by lenders who were focusing on first time buyer loans.
According to Mr Broadhead, one in four home owner loan products from building societies are designed for first time buyers, which shows that tis sector is being catered for and more focus should be placed on people looking for loans further up the housing ladder.
He said “We’ve seen house prices fall over the last two or three years and interest rate is at its historic low, meaning that previous first time buyers either have very low equity or negative equity. This disrupts the property chain as if they don’t move out, new first time buyers can’t move in. it is important to help them, but we need to look at the whole of the market.”
“We are seeing some innovation as more lenders are lending at higher loan to values as well as more creative schemes to help FTB’s with the support of their parents. The industry is aware of the need for first time buyers but don’t want to go too far as we need the whole of the market.”
