Almost seven out of 10 first-time buyers face difficulties getting a mortgage, according to new research, discouraging others from pursing homeownership.
The research by specialist lender Perenna found 68% face difficulties getting mortgage approval due to income levels — with the average house price in England now eight times more expensive than average individual incomes.
The research also found that 62% struggle to secure a large enough mortgage. This problem was particularly acute in London where property prices are a third higher than the average across the UK.
The research found that these problems are creating a knock-on effect, with almost one in two (42%) would-be buyers reporting feeling ‘discouraged’ about pursuing plans to buy their own home.
Perenna says these affordability problems are forcing many first-time buyers to delay marriage, starting a family or changing a job in order to concentrate on saving for a large enough deposit.
Its research indicated that 40% of first-time buyers think mortgage lenders need to support them by allowing greater borrowing power. It added that almost half (48%) agreed that if a mortgage allowed them to borrow more to buy, they would find this attractive to consider.
Perenna says this research demonstrates an appetite for its product range which offers longer-term fixed rate deals, from 15 to 40 years, often with no ERCs after five years.
Its current rates for first-time buyers and new purchases start from 5.76% for a 90% LTV (over 30 years with a product fee), and 5.99% for a 95% LTV (over 30 years with a product fee).
Perenna chief executive and co-founder of Perenna Arjan Verbeek says: “It’s a travesty younger people are put off from becoming a homeowner. Longer-term fixed-rate mortgages are part of this solution, providing greater borrowing power, and stability through payments that don’t shoot up — a far cry from the way traditional high street mortgages work.”
