Mortgage brokers said low deposit borrowing will not help buyers in the most expensive property markets
Boris Johnson’s plan to encourage a wave of 95 per cent mortgage lending to help young people on to the housing ladder has been met with a mixed response from mortgage intermediaries.
Mortgage brokers said any initiative that supports first-time buyers was welcome, but facilitating low deposit borrowing will not help those buyers in the most expensive property markets in the UK.
Over the weekend, Johnson shared his plans to create ‘Generation Buy’, in an interview with the Telegraph ahead of the start of the Tory Party’s virtual conference.
His solution to fixing the problem is to help them on to the property ladder with a small deposit, as few banks continue to offer home loans to borrowers with less than a ten per cent deposit. And those that do have limited their availability to avoid being swamped by demand.
Jane King, mortgage and equity release adviser at Ash-Ridge Private Finance, said: I know a lot of advisers are a bit nervous of this idea but I am all for it under the right circumstances.
In London and the South East where I advise, the deposit is always the main obstacle to home ownership even for would-be buyers with decent salaries. It’s easy for those who are well off or who have access to family support to be ultra-cautious but for everyone else, anything that offers help has got to be welcomed, King said.
Stuart Powell, managing director at Ocean Mortgages Plymouth, agreed the availability of low deposit mortgages was a key driver of the housing market. The property chain cannot continue without first-time buyers.
He added, a new government scheme such as Help to Buy could be the answer, although this scheme has been fraught with difficulties.
But allowing borrowers to lay down a deposit which is a fraction of the property’s value, will not help young households who will still be priced out of some parts of the market, said Richard Campo, managing director of Rose Capital Partners.
This article is for information purposes only.
Please remember that financial investments may rise or fall and past performance does not guarantee future performance in respect of income or capital growth; you may not get back the amount you invested.
There is no obligation to purchase anything but, if you decide to do so, you are strongly advised to consult a professional adviser before making any investment decisions.