Can FTBs get on the property ladder without substantial pocket money from mum and dad?
Despite lending figures to buyers with a smaller deposit increasing in 2012, it is still taking, on average, eight years for a first time buyer to save enough money to take those initial steps onto the ladder. So, in the current market, is it really possible for first time buyers to purchase property without a large advance on their pocket money?
According to e.surv chartered surveyors, 63,896 home purchase loans were granted to buyers with small deposits. This was an 11 per cent increase on 2011 activity when 57,691 purchase loans were agreed. However loans to this consumer group crashed by 13 per cent in the second half of the year as lenders attentions turned to wealthier borrowers.
This one-step-forward, two-steps-back cul-de-sac is prompting some lenders to reinvent the first time buyer wheel. However such reinvention seemingly does not deviate far from the bank of mum and dad.
Building on its customer feedback, Barclays have this week launched a new product aimed specifically at first time buyers. Its Family Springboard mortgage allows first time buyers to enjoy a competitive three year fixed rate of 4.69 per cent with a deposit of just 5 per cent.
The catch? In addition to taking the mortgage, the buyer’s family must open a Helpful Start savings account, paying in an additional 10 per cent of the property purchase price. Once the three year fixed rate has come to an end, the savings will then be returned to the family.
Commenting on the new product as well as its move to slash additional mortgage rates by up to 1 per cent thus offering borrowers access to its cheapest deals ever is Andy Gray, Managing Director of Mortgages for the high street lender:
“This is a real boost for UK homebuyers with small or large deposits as we are giving them access to the cheapest ever deals we’ve been able to offer, brought about by the combination of the low base rate and funding for lending scheme.
“We’ve listened to our customers and need to continue to drive confidence in the housing market, the new family scheme and today’s slashed rates will encourage people to think about buying or moving home, which in turn will help the economy move forward. For existing homeowners this is extra good news as they can still look to reduce their monthly outgoings by switching to cheaper rates.”
Content correct at time of publication