Over the past few weeks I’ve been thinking a lot about the situation for would-be first-time buyers, particularly in terms of accessing mortgage finance in the first place, but also the cost of that finance and whether it would be affordable to them.
Certainly, mortgage pricing across the board moved in an upward direction, swiftly and sharply, in the immediate ‘Mini Budget’ period and that could have presented some worrying times for new purchasers who might have been concerned
Thankfully, this doesn’t appear to have been the case, but there will be those relying on their ability to extend an offer in the weeks and months ahead, especially in those circumstances where it is now up in the air if their purchase will go ahead. We often live and work in a ‘chain-heavy’ market, and all it takes is for one of those links to fall out, and this could present issues.
Of course, for those that have never been through any sort of house purchase before, this can feel completely alien at the best of times, let alone the current situation where there has been such market turbulence.
However, as we move into a new month, and there is certainly a new political broom sweeping clean, there is hope to be found in a potential mortgage market which looks more like the market of six weeks ago, rather than one that has existed since that point.
What is important is the lending community works to offer a range of flexible criteria to potential first-time buyers, because as we know getting more people onto the ladder is – to mix a metaphor – the bedrock of our market.
Whether it’s helping those who fall just outside mainstream lender criteria, or those that have no significant adverse credit in the last six months, or it’s taking into account the potential to be funding purchases and ongoing payments through a range of income, or it’s taking into account a number of applicants, or it’s accepting gifted deposits, this is all about providing a range of options to first-time buyers who you might not describe as ‘vanilla’ borrowers.
This is one of the reasons why first-timers are now eligible for all our F1 and F2 products, and why they can access up to 75% LTV for our F3, and our newly-introduced, F4 range. It’s also why we have a specific range of products for professionals, which offers a higher income multiple to a range of qualified professionals, in recognition of their higher earning potential in the years to come.
We await to see how this ‘new’ government might go about supporting first-time buyers in the future but given these borrowers have been such a priority over the last decade and more, it seems possible we will see further state intervention to support new buyers, even as the Help to Buy Scheme and the government guarantee is ending.
Overall, we clearly need a marketplace which provides plenty of opportunities to first-time buyers, and that means continuing to offer product options to the widest range of potential borrowers we can.
Not every first-time buyer is going to start the journey in the same place and in order to help as many as we can, we need to recognise this and continue to meet individual wants and needs, with a focused offering that smooths the path to home ownership for the many who want to travel there.
Mark Whitear is director of commercial development at Foundation Home Loans