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New buyers find it 'impossible' to get mortgage
Sri Carmichael16 Feb 2009
Nearly two thirds of first-time buyers find it impossible to get a mortgage through their broker, figures show today.
Some 58 per cent of young house hunters could not secure a home loan in the last three months of last year as banks rationed lending, according to a survey from the Intermediary Mortgage Lenders Association.
Peter Williams, executive director, said only people with significant savings to put down were managing to get their feet on the housing ladder.
He said: "The first-time buyer end of the market has been hit extremely hard by lenders tightening their requirements. For youngsters without a substantial deposit, the only alternative is renting."
The average deposit now required is 22 per cent, the highest in 34 years.
Reader views (5)
Three months into a mortgage loan the builder's parent company stated I would need to have "three open accounts' to get mortgage insurance (I don't have any debt). I have totally protested this request, and may just have to end up moving into a larger apartment.
- Marolyn, Maryland, United States, 02/03/2009 22:43
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Louise,
Why are you so desperate to buy right now? It is very likely that if you buy this year your 10-15% deposit will be eaten up by further house price falls. Do you really fancy facing 2010 with negative equity.
BTW what is a "secure job" these days?
- Monty, London, 19/02/2009 10:03
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In response to Andy's comments: my husband and I have been saving regularly with a building society for two years and have between 10% and 15% deposit (depending on which house we want). We could well afford the mortgage repayments, have never had any credit problems or missed any payments, have secure jobs, and still nobody will lend to us, meaning our money is left going into the black hole of renting with no return. I don't see why lending to us would be 'insane' and yet still, owning our own house remains out of reach.
- Louise, Bucks, England, 18/02/2009 12:43
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Its seems similar to 35 years ago. Then you had to save regually with a building society for at least a year before they would even consider you for a mortgage, and then you needed to put down between 10% and 15% depending on the property. Most people who bought in the 70's did not end up with unmanagable debt, the building societies and banks would not lend to you if they believed you could not repay. Getting credit cards was also not easy and you certainly never had the flood of invites through the letterbox as we all have in recent years. It looks like we are back to the age of sane lending.
- Andy, Crowborough England, 16/02/2009 17:04
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Why is this a surprise? The mortgage lending institutions will only start lending once property prices have bottomed out and they are sure that the money they lend can be secured against the value of the property at the lowered values. The quicker the correction takes place, the quicker will these institutions lend again. All the policies to delay this correction in property prices back to rates whereby mortgages are 3-4-5 fold income of the borrowers rather than 8-10 times as in recent years will simply delay recovery for everyone.
- John W, Ottawa, Canada, 16/02/2009 16:40
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