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Government Moves To Support First Time Buyers In The Tenant Trap

15 July 2022 / Area Guides

Mortgage Rate Review for Autumn/Winter 2022 Buyers.

With a prime ministerial pledge earlier this year to offer Generation Rent more ways to become Generation Buy, the odds-on Conservative Party leader, Liz Truss, has clearly outlined her commitment to review many aspects of the country’s housing agenda – from property stock to mortgage availability to those that need it, and everything in between. 

As we absorb government plans,  it remains to be seen whether Truss or Sunak will ultimately succeed to positively impact the property sector. However, there does seem to be universal agreement that a review of the mortgage market and associated criteria for buyers, first time or otherwise, is urgently required to offer greater support to those with stable jobs, deposits in hand, who are unjustifiably still struggling to take a step onto the property ladder. 

“Market conditions are exceptional, that is universally agreed,” explains Karl Le Brasse, Stirling Ackroyd’s Managing Director – Sales. A series of advantageous mortgage criteria adjustments are being discussed in government, a snapshot of which was seen earlier this year when Conservative Party leadership detailed the benefits of offering First Time Buyers mortgages of up to 95%, essentially a way to as Boris Johnson put it, ‘unbolt the door to home ownership’. He also outlined at the time how, “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.”

“Government figures show that more than half of current renters could afford a mortgage, but only one in 17 are able to access a typical first-time buyer mortgage because most lenders ignore an applicant’s ability to pay rent as proof that they can afford to pay a higher mortgage. It is also estimated that rent equates to 30%+ of the average renter’s outgoings, and given that the majority of tenants pay rent in full, on time,  it makes complete sense to take this into account when first time buyers in particular are looking to secure a mortgage,” Karl continues. 

“With lower deposits and willingness to consider the ability to pay rent as proof of ability to pay equivalent monthly mortgage payments, first time buyers, in fact all eligible tenants, could move to secure a home of their own. Over a 10-year period rent and mortgage payment rises have been essentially on parity – so this makes total sense.”

Autumn is around the corner. We await the 5th of September to see which new Conservative Party leader will hopefully lead the charge on behalf of the millions of potential property owners. 

Other government plans under discussion: Committed to building 300,000 new homes by the mid-2020s. Councils will choose how many new homes their communities need to build; work with local communities to identify strong sites for redevelopment; reduce planning restrictions; give local councillors power to create the communities they want; create new model towns and industry hubs.

Mortgage – August 2022

Many first-time buyers and long-term tenants are set to benefit if the proposed changes to UK mortgage criteria becomes a workable reality. However, for the hundreds of thousands of buyers that need to find and secure the best mortgages available for Autumn/Winter move dates, securing a mortgage approval in principle – as soon as possible – will enable them to lock in lower rates in advance of impending interest rate rises.  With the Bank of England set to make its next interest rate decision on 4 August, it is widely expected that there will be an additional base rate increase this month, so time is of the essence.

Check out the best of the available mortgages in the UK market (Ref HomeOwners Alliance – July / August 2022), Our mortgage calculator is found on any of our properties, click here to see our For Sale properties.

UK Mortgages Rates July/August 2022*

2 Year Fix Rate

Barclays – 2.89%. 45% deposit. £749 fee

Metro Bank – 3.19%. 25% deposit. £999 fee

HSBC UK – 3.19%. 40% deposit. £999 fee

3 Year Fix Rate

Newbury Building Society at 3.19%

5 year fix rate

Barclays (Option 1) – 2.99%. 45% deposit. £749 fee

Barclays (Option 2) – 3.10%. 40% deposit.  £999 fee. Remortgage only.

AIB – 2.60% at 85% LTV.

10 Year fix rate

First Direct – 3.34%. 40% deposit. £490 fee

Variable Rate

Beverley Building Society – 3.47% (discount for 2 years which has an initial rate of 1.77%). 35% deposit. £1,895 fee

Furness Building Society – 4.45% (discount for two years, which had an initial rate of 1.44%). 20% deposit. £999 fee

Furness Building Society – 4.45% (discount for two years, which had an initial rate of 1.44%). 20% deposit. £999 fee

Help to Buy Mortgage

London Barclays offers the 5 year Fixed London Help to Buy Equity Loan Scheme mortgage – 2.99%. £749 fees

Ex-London Barclays offers the 5 Year Fixed Help to Buy Equity Loan Scheme mortgage – 3.30%. £749 fee

*At time of publishing – subject to change

Green Mortgages

Platform (c/o Co-operative Bank), offers existing customers a 5 year fix – 2.94%. 60% LTV. No fee

Criteria: 50%+ funds dedicated to eco home improvements (solar, boiler upgrade,  loft insulation).

Borrowers register online to support customers to estimate property Energy Performance Certificate rating, energy costs, CO2 emissions and potential options for updates and renovations and the cost saving benefits.

*At time of publishing – subject to change

For more advice about the property market, contact one of our branches

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