The move would make it easier for FTBs to get a foot on the housing ladder
The recent suggestion from pensions minister Guy Opperman that first-time buyers may in the future be permitted to access their pension early in future if they need the cash to pay for a home deposit has been welcomed by Ipswich Building Society.
Opperman wants to explore the idea of using workplace pension auto-enrolment to fund both home deposits as well as ‘rainy day’ savings funds.
The move would in theory allow auto-enrolment pensions contributions to be accessed by first-time buyers as a deposit for a mortgage, making it easier to get a foot on the housing ladder.
With the latest data from Rightmove revealing that the average asking price of homes coming on to the market in Britain has hit a record high, many people who do not yet own property will not do so for quite some time.
The website’s monthly snapshot of new listings showed sellers are asking for an average price of £323,530, an increase of 1.1% since last month, and 5.5%, or £16,818 more than this time last year, illustrating the fact that the gap between income and house prices has sky-rocketed in recent years.
It is therefore unsurprising to find various reports suggesting that a growing number of younger people are giving up the idea of ever owning their own home – at least for now.
Ipswich Building Society’s head of mortgage sales, Charlotte Grimshaw, commented: With the average asking price of homes hitting a record high of £323,530 according to Rightmove data, first-time buyers could be forgiven for thinking it is an impossible aim to get onto the housing ladder. However, with government initiatives such as the current stamp duty holiday and the former help to buy scheme, it is clear there is an emphasis on supporting people into home ownership.
This latest idea about potentially permitting auto-enrolment pensions contributions to be accessed by first-time buyers as a deposit for a mortgage is still very much at the concept stage, but Grimshaw says that her firm “would be interested to learn more about how it could work”.
She commented: As with any incentive, would-be borrowers should review their individual circumstances and weigh up what’s best for them, and could consider seeking independent financial advice.
First-time buyers continue to face a difficult market and would do well to continue to build up a deposit for their first property, whilst remaining practical about what their first home should achieve – it may be more realistic to get a step on the ladder by first purchasing a smaller property or one in an alternative, cheaper location rather than automatically aiming for the house of their dreams by dipping into their pension, Grimshaw said.
She said, it’s certainly an interesting concept, but it’s one that’s unlikely to help many of today’s twenty and thirty-something first-time buyers.
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