UK mortgage constraints are aggravating the shortage of first-time buyers and impeding recovery, while government efforts are failing to target fundamental financial difficulties. Without access to lending, the dream of homeownership is getting deferred for growing numbers of young Brits, who are now forced to live with their parents for longer periods of time. See the following article from Property Wire for more on this.
The British real estate slump could last for years as first time buyers find themselves unable to get on the property ladder, mostly due to lack of funds, it is claimed.
First time buyers are finding it harder to buy a house than at any point for a generation. Around a third of British men and a fifth of British women aged 20 to 34 live with their parents so there are fewer first time buyers now than at any time in the last 35 years, with the average age for the unassisted first time buyer now 37, according to Curzon Investment Property, a London based investment specialist.
‘While Spain has swathes of unwanted new homes, the paradox in Britain is that despite the pent up demand, we don’t have the mortgage market to support a recovery. And things are not about to improve. The inertia of the wholesale lending markets will take years to shift and the £300 billion time bomb of mortgage lending supported by Bank of England and Treasury schemes that needs to be refinanced by 2015 will also be a major headache for the UK government,’ said director James Moss.
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‘All we have seen from the UK’s new coalition government is measures that tinker around the edges. Nothing we’ve seen address the core economic problems of supporting a recovery and moves to give local councils the right to veto new developments simply undermine the fundamentals of the housing market which rely on certainty and economies of scale,’ he added.
According to Paul Abbott, head of property and mortgages at Paragon, there is a high desire to purchase property but the banks demand for large deposits often makes renting the only option for a number of people.
More first time buyers are looking for advice so there is a demand, research from comparison website unbiased.co.uk shows. In the first six months of the year, the financial website recorded a 24% rise in consumers looking for advice from a whole of market mortgage broker, compared with a year earlier.
But the latest Trends in Lending report from the Bank of England shows that approvals for house purchase lending decreased slightly in June, compared to a month earlier, while the total amount loaned for house purchases remained unchanged on May and only a little higher than at the start of the year.
Also the Bank’s Credit Conditions Survey, published earlier this month, warned that lenders are expecting mortgages to be less readily available in the months ahead, as the wholesale money markets tighten.
This article has been republished from Property Wire. You can also view this article at Property Wire, an international real estate news site.