Whilst we are currently experiencing a “property boom”, it’s becoming more difficult to secure a mortgage.
A few years ago, lenders offered 100% mortgages, with the majority opting for the 95% loan, so a deposit was achievable, within a short period of time.
Currently it’s at 10%, with some lenders requesting 15% deposits, making it extremely difficult for many to save this amount. Other criteria have also changed, income’s need to be higher, part time wages are not considered and if your self-employed it’s almost impossible. For some lenders 20 per cent is the minimum.
With the government offering a stamp duty holiday and prices gradually still increasing in value, the lenders need to take another look at their lending rules and offerings.
I don’t believe the housing market will crash, it’s just a more difficult time to borrow money from the mortgage lenders, which will slow down the market, but not crash it. The fundamentals are still good for the majority of buyers – with not enough housing to meet demand. Nothing is likely to change that.
But while lenders are making it harder for first time buyers, those with property looking to move up the ladder, should have a good percentage of equity in their homes. The higher the deposit the better the rate you can secure. So now is the time to swoop.
My advice for first time buyers, is hunt around for the mortgage offers which do appear on the market and then disappear. In the meantime, keep on saving and maybe ask family for help, there is no point trying to take a loan as it won’t be accepted by your lender as deposit.