First Time Buyers – Mortgages

While there have been many reasons to not enjoy 2020, the challenges faced by FTBs has been a contentious issue for many.

Written by: Category: Buying, News January 10, 2021

Will First Time Buyers Struggle For Mortgages In 2021?

While the stamp duty holiday invigorated the property market in 2020, many observers complained it did little to assist first-time buyers (FTBs). The support was more for people buying larger homes or homes in a more expensive area. While there have been many reasons to not enjoy 2020, the challenges faced by FTBs has been a contentious issue for many.

First-Time Buyers have found it difficult during 2020

An in-house study conducted in December highlighted the frustration many first-time buyers feel about trying to purchase property given the current circumstances:

  • 76% of first-time buyers said they were “worried, confused and angered” as to the impact of Covid-19 on their dreams of owning a home
  • 65% of prospective first-time buyers said it feels “impossible” to step on the property ladder
  • 62% of prospective buyers have “admitted defeat” in their hopes of home ownership, rather than saving for another year or more
  • 44% of respondents feel confused by the changing deposit requirements and lender criteria

While it’s encouraging to see the property market remaining open for business with viewings and valuations remaining in place during the second lockdown, it’s disappointing that first-time buyers are struggling to navigate the market. The financial impact of the pandemic has meant that lenders are pulling a number of high LTV mortgages. As of this week, there are only 74 mortgage deals available for mortgage applicants with a LTV over 90%. By comparison, this time last year there were over 2,000. We’d like to see lenders beginning to reintroduce higher LTV products that will help first time buyers.

Lynn Wallwork – Mortgage Adviser / Director @ Real Financial Services

More affordable mortgage rates are required

During the lockdown, many mortgage lenders removed mortgage products for first time buyers. There were many reasons for this, including a shortage of staff members and a surge in demand for mortgage holidays, requiring lenders to reduce the products they offered.
Of course, many lenders will also have considered lending to FTBs to be a greater risk, which is why these products were the first to be removed.

In 2021, we expect a number of major mortgage lenders to once again provide mortgage products which are suitable for FTBS, including:

  • Yorkshire Building Society have reintroduced a 90% mortgage
  • Nationwide has reintroduced a 90% mortgage
  • Lloyds Bank have reintroduced a 90% mortgage from 8th December 2020
  • Halifax have reintroduced 90% mortgages from 8th December 2020

It is pleasing to see these offers return, but borrowers must review the terms and conditions to ensure the loan is suitable for them. Also, it doesn’t appear as though 95% mortgage products will be available in notable numbers any time soon, so many FTBs will continue to struggle to purchase property in 2021.

There is a Help To Buy scheme in place

The help to buy equity loan scheme is being extended to run to 2023, but it will only be available for new build homes.

Key components of the Help To Buy scheme:

  • Buyers need at least 5% of the new build property to use as a deposit
  • The Government will lend the buyer up to 20% (or 40% in London) of the sale price
  • The buyer borrows the rest of the money (up to 75%, or 55% in London) from a mortgage lender
  • The mortgage is repaid after 25 years or on selling the home

Helping with your mortgage

At VitalSpace, we appreciate there is considerable uncertainty at these times, and clients want clear guidance. We are more than happy to provide as much assistance and information as you can.

Your mortgage is probably the largest financial transaction and commitment you are likely to undertake. We believe it is important to seek independent mortgage advice tailored to your needs and requirements. This is where Lynn and Real Financial services comes into play.

Real Financial Services are based at the AJ Bell Stadium in Eccles and for years, they have assisted with securing mortgages for our clients. So, to answer your questions, there was simply no better place to turn to than a professional working with mortgages day in day out. Real Financial Services can be contacted in many ways, which means you can connect with them from the comfort of your own home.

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