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Life gets better for first-time buyers

Life is getting easier for first-time buyers as barriers to homeownership fall and government schemes help more climb on the property ladder.

The latest Property Tracker from the Building Societies Association shows that barriers to homeownership such as raising a deposit have fallen to their lowest level for six years.

Some 52% say that finding a deposit is a hurdle to overcome, down from a high of 69% in September 2011.


Access to mortgage finance and monthly repayment affordability has also fallen, while job security has improved.

Paul Broadhead, BSA head of mortgage policy, said consumers are feeling reasonably optimistic about getting on the property ladder. “Awareness of Government schemes, such as Help to Buy and the availability of higher LTV mortgages, helps to bring choice and competition to the market.”

Charlotte Nelson, finance expert at Moneyfacts.co.uk, said Government schemes such as Help to Buy have helped to foster a positive attitude.

“This means consumers now feel a little more confident about gathering up enough cash to step on to the property ladder.”

Nelson said the mortgage market for those with a modest deposit is the best it has been in a long time, with the number of products for those with a 5% deposit increasing from 179 in December 2014 to 240 today.

“Average rates have also dropped, for example, the average two-year fixed rate at 95% LTV has fallen from 5.23% to 4.30% in just one year.”

Andy Frankish, new homes director at Mortgage Advice Bureau (MAB), said the Help to Buy equity loan scheme helped more than 6,000 people onto the property ladder in Q3 2015, an annual increase of 4%.

“The vast majority of those benefitting from the scheme are first-time buyers purchasing properties in the lower price brackets.”

Frankish said the greater focus on shared ownership and the creation of starter homes should help, as will increased building.

Doug Crawford, chief executive of My Home Move, said the success of the Help to Buy equity loan scheme has been overrated.

“A significant chunk of those using the scheme still require extra help from the Bank of Mum and Dad.”

The scheme’s limitations are also reflected in the average cost of a house purchased through it, Crawford said.

“The cost of a house typically purchased with an equity loan stands at £217,999, eight times the average salary, raising questions over whether such homes really count as affordable.”


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