Hope on the horizon for first time buyers?

January 13, 2017 by Brendan

Borrowers

Now that the Help to Buy mortgage guarantee scheme has ended, initial thoughts of first time buyers will be turning to their prospects of buying a home. As house prices soar far faster than earnings, and the housing shortage continues, many first time buyers may be wondering if they will be able to afford their dream home.

However, some experts believe that the future isn’t as bleak as initially believed. According to the latest figures from the Council of Mortgage Lenders, lending to first time buyers has increased. The interest rates remain at their lowest point for many years, and the availability of high loan to value mortgages is at its highest level of the last eight years.

The director of the Legal & General Mortgage Club, Jeremy Duncombe, issued a warning to house buyers, saying that the cost of an average home in the UK is now six times more than the average income. The ratio of house prices to earnings in London is now 14 to 1, which is far higher than the UK average of 6.5 to 1.

As most lenders will offer between three and five times the income of a borrower, the widening gap between house prices and income is worrying. However, although the Help to Buy scheme has finished, many lenders are continuing to offer higher loan to value mortgages, with some of them at competitive rates.

First time buyers may fare better if they speak to a CeMAP qualified mortgage adviser, who will know the lending criteria for each lender.