"The number of mortgages available to first-time buyers with deposits of 10% or less has dropped by almost 80% since the pandemic struck."
According to the Government’s latest UK House Price Index, the average price of a house in the UK increased by 8.5% over the year to December 2020 to hit a record high of £251,500.
The increase has been put down to a number of factors, such as the stamp duty holiday, a release of pent-up demand and people re-evaluating the location and type of house they’re after, but whatever the reasons, it means first-time buyers now have to raise an even bigger deposit.
And if that’s not enough, they now have to contend with the fact that the number of mortgages available to first-time buyers with deposits of 10% or less has dropped by almost 80% since the pandemic struck.
When you take all of that into account, perhaps it’s no surprise that the average first-time buyer is now 34-years-old – six years older than in 2007 and eight years older than back in 1997.
Taking that first step on the property ladder has always been difficult, but the current climate means it’s particularly tough. Fortunately the latest version of the Government’s Help to Buy scheme could offer first-time buyers in England some much-needed hope.
From 1 April, the new Help to Buy Equity Loan Scheme (2021-2023) will be launched, aimed solely at first-time buyers purchasing a new build property. The new scheme introduces regional price caps, with each area of the country having a maximum property value that will be eligible for the scheme.
As with the existing scheme, first-time buyers will be able to borrow up to 20% of the cost of a newly built home, or 40% if they are purchasing in London. Buyers must pay a minimum of a 5% deposit and then use a Help to Buy mortgage to fund the remaining cost of the property.
And there’s more good news for first-time buyers, with the Government recently extending the deadline for the outgoing Help to Buy Equity Loan Scheme (2013-2021). Homebuilders now have until 31 May to complete the build and for buyers to legally complete and get the key to their home.
It’s worth mentioning that the Government has recently extended the deadline for homebuilders to complete the build and for buyers to legally complete and get the key to their home to 31 May.
I believe that in times when it’s difficult for people to get on to the property ladder, it’s vital that they continue to receive all the support they need to ensure they can benefit from a scheme which has already played an important part in the purchase of more than 228,000 properties by first-time buyers.
With house prices at a record high and fewer products to choose from industry-wide, we’ll continue to support a scheme which ensures that home ownership remains an accessible aspiration for as many people as possible.
As one of the first specialist lenders to enter the Help to Buy market, we recognise just how important the scheme has been, particularly to those first-time buyers who may also have experienced a small financial hiccup in the past.