It is believed that as many as twenty per cent of young British adults have abandoned the ambition to own their own home because it continues to be extremely difficult for many first time buyers to secure a mortgage. A survey by a major UK mortgage lender suggests that the current problems facing first time buyers will have implication for the whole of society and will also affect the jobs market in the coming years.
In addition, nearly 75 per cent of people questioned in the survey between the ages of 25 and 40 believe that there is a social and economic division being created between people who own their own home and those who do not. And they do not think the government schemes to help them get on the housing ladder will actually work.
Owning your own home in the UK is an important goal for a large percentage of the population but, increasingly, the number of people who think they will achieve this goal is dwindling. In fact, 36 per cent of respondents to this particular survey want to buy a home but they do not believe they will ever be able to do so.
It is difficult to truly put down roots when you are renting a home as there is always some uncertainty about whether the landlord will continue to rent out the property and it is usually impossible to re-decorate to your own choice. So renters can never make their home truly their own. But more importantly they worry about what will happen when they retire and do not own their home, mortgage-free, as most home owners expect to do. This has a potentially huge impact on the social balance in society and suggests that affordable homes need to be available more readily, to more people, but also that those who cannot buy have access to more secure social housing and have to rely less on the less stable, private rented sector of the market.
Critics of the Funding for Lending and Help To Buy government schemes intended to help young people to buy a home say that, in fact, they are simply helping create more private landlords as Buy To Let mortgages become more affordable and easier to arrange. The knock on effect of more buy to let borrowers seems to be that house prices are being pushed even further out of the reach of young first time buyers.
So it remains difficult for the average first-time buyer to find an affordable home and secure a mortgage for it. Even those with a mortgage to support their monthly repayments cannot find a suitable deal because of a lack of a large enough deposit. Many young graduates also still have student loans which affect the affordability criteria by which lenders assess their applications.
Those who do have a reasonable deposit often find they still do not have access to the best interest rate deals and so cannot afford to pay the large mortgage repayments, especially now that most lenders will insist on repayment terms. Those living in London or the South East seem set to continue to struggle to find a home they can afford to buy and rising prices are pushing them further and further from their reach. Whilst the average house price across the UK is a staggering £250,000, it is much higher when looking just at the South East. Young professionals with a reasonable deposit might find that a specialist mortgage broker will have access to lenders they would not otherwise be aware of, particularly if they are in a profession where their salary is likely to rise significantly during their career.