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A Good Year for First-time Buyers?

A Good Year for First-time Buyers?

By Peter Barry

With the Council of Mortgage Lenders (CML) reporting a 14% rise in first-time buyer lending at the end of last year, it would seem – on the surface at least – that things are looking up for anyone hoping to become a homeowner in 2013. With first-time buyers having been squeezed out of the market for so long, words of doom and gloom ringing in their ears, many twenty and thirty somethings have resigned themselves to hanging around the family home for years past their welcome date, or elongating a shabby student existence in order to save money.

Scrimping and saving
They survive on a diet of beans and own-brand lager, as they try and squirrel away every last penny of their disposable income in the vain hope of saving enough for a deposit on a studio apartment with no redeeming features – other than it has their name on the deeds. But it’s a vicious circle: while they diligently save, they have to sit and watch helplessly as property prices continue to rise – the dangling carrot swaying at ever-increasing distances and seeming perpetually out of reach.

However, this single-minded approach to the ultimate goal of home ownership could be about to finally pay off. With a new generation of ‘savers’ in our midst, first-time buyers will finally be moving into houses they can actually afford; they won’t be left with loans exceeding the value of their property, or monthly payments that are unobtainable. Although the halcyon days of walking into a bank and walking back out again with a 90% or 100% mortgage might have helped thousands jump on the property ladder ten or more years ago, it also saddled a generation with crippling debts and house repossessions.

Bank on it
But it would seem that the banks, having had their fingers severely burnt and their knuckles well and truly rapt, are finally relaxing the impossible deposit requirements for first-time buyers, in an attempt to welcome them back into the fold of the mortgage world. So, although, in real terms, deposits are higher than they’ve ever been, percentage-wise they’re coming down from the giddying heights of a few years ago, when first timers on the property ladder were virtually priced out of the system. And with a solid few years’ of savings now behind them, buyers have a better chance of stumping up the deposit for a property they might actually want to live in.