People Giving Up On The Idea Of Home Owner Loans
The recent lack of availability of home owner loans and mortgages from lenders, coupled with the particularly tight lending criteria and low loan to value ratios, has made it increasingly difficult for potential first time buyers to get onto the housing and home owner loan ladder.
A recent survey conducted by moneysupermarket.com revealed that the average age of a first time buyer has now reached 38, meaning that many of these individuals will be paying their home owner loan almost up to their retirement age.
With the current difficulty in obtaining a cheap loan for house purchase and all the negativity surrounding the housing market and economic conditions in the UK, around 31 per cent of people who currently do not own a property, which equates to approximately 6 million individuals, said that they had given up on the idea of owning property altogether.
The average loan to value ratio for a first time buyer currently stands at 77 per cent. This means that someone buying a house for £150,000 requires a deposit of £34,500, a figure which is beyond the means of many would be property owners.
Although there are now some home owner loan products which offer up to 90 per cent loan to value for first time buyers, many of these carry expensive interest rates, making loan repayments unaffordable.
Clare Francis of Moneysupermarket.com said “House prices may have fallen in many areas, but they are still high. This coupled with the need for such a high cash deposit is pushing many people out of the market. There is still limited choice if you have a deposit of less than 10 per cent and the rates on these loans are around 5.30 per cent, which is significantly higher than the most competitive rates.”
