A survey by Halifax has revealed that only 43 percent of people are currently saving for a mortgage, a figure which has dropped by 6 percent from 2014.
The factors that have deterred first time buyers are that house prices have jumped, there is stricter lending criteria, while wage growth remains slow, leading to many writing off their prospects of ever getting onto the ladder. The number of tenants now intending to rent for life has increased from 13 percent in 2011 to 16 percent in 2014. The size of the deposit required is a clear challenge and the average amount that a non-homeowner can afford to save each week – £33.35 – represents a mountain to climb.
Whilst the actual numbers of first time buyers has increased in recent years, the 2014 levels are still lower than the pre-recession figures, by some 22.6 percent.
The Government programmes designed to assist first time buyers and low interest rates have not helped to change attitudes among prospective buyers, 37 percent of whom in 2014 thought it was ‘more difficult’ to secure a mortgage than in previous years.
One cause for the slowdown in the first time buyers’ market has been attributed to the Mortgage Market Review in 2014, which was introduced to ward against irresponsible lending, followed by a cap on the number of high loan-to-value mortgages by the Governor of the Bank of England in the second half of 2014, resulting in a 11 percent drop in first time buyer borrowing in London.
Source: The Daily Telegraph