Building Societies must support Government to improve prospects for first-time buyers - Colin Fyfe

Government schemes are generally well-received by those aiming to get onto the housing ladder, the Building Society’s Association’s (BSA) March Property Tracker shows, with 45% of aspiring buyers saying that these schemes have made it easier for them to raise a deposit.

28% of people who aspire to buy say that the schemes have made no difference to them and a smaller group, 8%, say the schemes have actually made it harder for them to raise a deposit.

This quarterly consumer survey shows that those who aspire to buy with a mortgage are most commonly aiming for a 10% deposit (25%). A slightly smaller group (22%) are aiming to save over 25% of the cost of their first home. A quarter of people think that they will raise their required deposit within a year, three-quarters within 5 years.

Darlington Building Society, a member of the BSA, is committed to helping first-time buyers get onto the property ladder with a range of bespoke products, including a 95% mortgage.

Colin, Fyfe, chief executive of Darlington Building Society, said: “It is good news that first-time buyers believe that Government schemes are making it easier to get onto the property ladder.

“However, lenders must also play their part in tailoring mortgages to further encourage people to take the plunge into property ownership. By basing lending decisions first and foremost on affordability and life situation we can help people to achieve the dream of owning their first home.”

While Government schemes are being viewed on balance positively with only 8% of people unaware of them, their existence highlights that there is still a significant lack of new house building. Government schemes are helping to fuel buyer demand and aid the financial ability to buy, but do not address the underlying chronic lack of affordable homes, which is acute in some areas like London. Commenting on the results, BSA Head of Mortgage Policy, Paul Broadhead, said:

“A significant proportion of aspiring homebuyers say that Government schemes have helped them to raise the required deposit to get on the housing ladder, which is good news.

“However, these are clearly demand side interventions that address the symptoms and not the root cause of the problems in the housing market: the fact that affordability is becoming stretched across all tenures; and the failure of successive Governments to build or facilitate the building of sufficient homes of the right type, across mixed tenures in the right places.

“Help to Buy mortgage guarantee, which is arguably the Government’s most successful and high profile scheme, comes to an end at the end of this year. Some lenders, including many building societies, were active in the high loan-to-value (LTV) market before the scheme, and will likely remain so when the scheme ends. It is vital that the Government clearly articulates its strategy to maintain consumer confidence and avoid a squeeze in the number of mortgages available at high LTVs once it is gone.”

Colin Fyfe added: “Paul Broadhead makes a very good point and we would also call on the Government to take measures to stimulate the construction sector and guarantee a sufficient supply of housing that is affordable by first time buyers.”

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