First-time buyers may be a thing of the past

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by Kay Murchie

Britain’s first time buyers are facing extinction as the next generation of home owners face a lifetime of renting and according to the latest YouGov poll, this is a concern for over 80% of the population.

An increasing amount of people are desperate to get onto the property ladder in spite of increasing property prices and a lack of available homes, say the New Homes Marketing Board (NHMB).

Consequently, mortgage lenders have reported a massive increase in 100% mortgages as first time buyers battle to save enough for a deposit.

According to the mortgage Advice Bureau (MAB), demand for its 100% mortgage range doubled in the first 9 months of 2007, compared with the same period in 2006 while the amount of buyers taking out mortgages in excess of 100% increased by a further 45%.

A similar trend has been noted by other brokers and mortgage lenders. The Co-operative Bank has noted a 30% increase in 100% mortgages as a proportion of its first-time buyer lending since the start of 2007. In addition, the Alliance and Leicester has been offering loan-to-values of up to 125% since April and is finding many are quite happy to sign up for this.

Government incentives like abolishing stamp duty are being seen as too little too late as first time buyers are left with no choice but to take on huge mortgages if they want to get onto the property ladder.

David Pretty, New Homes Marketing Board Chairman, concluded by saying that the next generation can’t afford to purchase a property or may not be able to afford to rent a modest home in the future either - it’s a social time bomb.

A programme dedicated to this subject is on Monday 5 November on Channel 4 at 8.00pm. It questions whether Britain’s house-price boom will create a new generation unable ever to afford a home of their own.