On Tuesday, the Council of Mortgage Lenders participated in a summit organised by Grant Shapps, the housing minister, to find ways to help the UK’s first-time buyers take the first step on the housing ladder.
At the end of last year, data from the CML shows that the average first-time buyer deposit was £31,500. Mortgage availability has decreased dramatically since the credit crisis and lenders have set stricter lending criteria and demanded higher deposits.
The average first-time buyer now needs a deposit equivalent to a full year’s salary before he can get a mortgage. This is a massive jump from the £12,700, or 37% of income, that was required in 2007.
The housing summit discussed various ways to help first-timers such as developer-led deposit matching, shared ownership, discounted mortgage rates and lender risk insurance. There were also suggestions for a range of programs to allow other people to contribute or back a contractor mortgage.
The CML admits that it’s not possible to wave a magic wand over the problem and that it will take time to remedy the present situation.
The Building Societies Association, which was also represented at the summit, called on the government to put a faster house building program in place. If there were more properties available, house prices would decrease and the housing market could move more freely.
Shapps is keen to get industry players talking amongst themselves to come up with solutions. He made reference to the fact that even people with good salaries struggle to get a mortgage and said that steps must be taken to ensure the current generation is not locked out of the housing market forever.
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