In an effort to help more people get onto the property ladder, Boris Johnson announced an overhaul of the mortgage market to help Generation Rent become Generation Buy.
Currently, house prices are soaring, mortgage lending restrictions are strict, and deposit requirements are high, making it extraordinarily difficult for a large number of people to afford their first home.
As part of his speech in Lancashire today, the Prime Minister said the government is exploring ways to provide first-time buyers with better access to low-cost loans, such as 95% mortgages, to allow them to become homeowners.
He said “First-time buyers are trying to hit a continually moving target. By the time they’ve put aside money to secure their mortgage, prices have risen and it’s no longer enough.
“And of course the global rise in the cost of living is only making life harder for savers. So we want it to be easier to get a mortgage. Reporting back this Autumn [the review] will look at how we can give our nation of aspiring homeowners better access to low-deposit mortgages.”
It has been reported that more than half of today’s renters could afford a mortgage, but due to a variety of constraints, only 6% could obtain a typical first-time buyer loan.
Compared to a decade ago, average monthly rental payments have risen by 40%, but average monthly mortgage payments have risen only 11%. In addition to being 56% higher than a decade ago, the average asking price for a first-time buyer home today is £223,117.
What does this mean if you’re looking to buy now?
Before you start looking for a home, you can find out how much you could borrow if you have already saved a deposit. You can then determine your budget.
Various lenders calculate how much they will lend you in different ways. The criteria include factors such as your income, the amount of your deposit, your regular expenditures, and your credit rating. In the case of a joint application, these factors will be taken into account for both of you.
