Is the first time buyer going to save the housing market?

Mortgage review for the first time buyer:

This is just another quick post which got me thinking so thought I would share.

In 2008 there was a collapse in the commercial market, but this is now starting to slowly build up again. But housing has been another issues and this is mainly due to the lack of mortgage available. Constrained mortgage lending and the continued uncertainty in the economic climate remain to great factors of the housing market. The recovery process of this is going to depend on the greater availability of mortgage lending and many agree that the first time buyer if the key to getting the market going again.

The council of mortgage lenders shows that gross lending for mortgages fell from £363 billion in 2007 to £136 billion last year. This affects us all as in 2007 a first time buyer would have needed a deposit of £12,700 and three years later this was up to £32,300. This is alot of money for anyone, never mind a first time buyer. But in relation to my current university work I believe designing a concept for affordable housing would reduce the price of these ghastly deposits. PRP’s Andy von Bradsky says, ‘Unless a first time buyer can get the money from the bank of mum & dad then they have a problem.’

But if first time buyers are the key for supporting and helping the housing market recover, I feel I should base alot of my designs around this. But many companies have already started to try and devise solutions aimed at the first time buyer. Barratt homes have developed its Headstart package and Taylor Wimpey has Easystart. These are all shared equality schemes which allows the buyer to purchaser a set % of the home, whilst the other % remains property of the house builder, which helps bring down the initial costs. I have looked into these schemes and whilst I do think there a good idea, i do have some reservations. My first is that you only own a certain % of the property and this means you don’t fully own the property and you therefore have to rent the other % of the owner. This means that not only do you have to pay your mortgage you also have to pay rent, which I don’t think will be too excessive, but do feel it could cause some issues. Another issue is that you can gradually acquire the other % of your home, but some don’t let you ever buy it 100%.

Last year the government admitted that 1.4million households wanted to buy their own home, but found this not possible due to mortgage lending. They have now predicted that over the next decade the number of first time buyers will increase by 800,000 but this may take several years.

I am looking at stepping onto the property ladder, but feel my biggest hurdle will be the large deposit and acquiring a mortgage. I however do think if more affordable housing is built, more people would be able to make that step onto the property market.

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