The only way is up as in­ter­est rates re­main low

Banks and build­ing so­ci­eties have kept a tight grip on lend­ing, but there are signs of re­lax­ation for 2012 – and more help from the Govern­ment, as Sharon Dale re­ports.

Yorkshire Post - Property - - PROPERTY -

TIGHT lend­ing cri­te­ria has been blamed for the par­tial paral­y­sis of the prop­erty mar­ket over the past few years.

But what does 2012 hold for ex­ist­ing bor­row­ers and those des­per­ate to get on the first rung of the prop­erty lad­der?

Peter Lead­bet­ter of Dacre, Son and Hart­ley Fi­nan­cial Ser­vices is cau­tiously con­fi­dent that there are bet­ter times ahead.

“The ex­ten­sion of the 0.5 per cent Bank of Eng­land base rate is re­sult­ing in lenders of­fer­ing some of the best deals that we have seen for more than 20 years and they are pric­ing their prod­ucts in­creas­ingly com­pet­i­tively.

“Plus some lead­ing mort­gage lenders have re­laxed their cri­te­ria in the last 12 months. In some cases sin­gle bor­row­ers can se­cure mort­gages for up to four times their salary and home buy­ers can choose to take mort­gages over longer pe­ri­ods than the tra­di­tional 25 year time frame which will re­duce monthly re­pay­ments.”

Franz Muelthaler, mort­gage ad­vi­sor at Wake­field and Dews­bury-based Hol­royd Miller, agrees that chances of get­ting a mort­gage are bet­ter than four years ago when the credit crunch first bit, but adds that many first time buy­ers are still un­able to buy their own home.

He says that although a few of the big lenders are now of­fer­ing 90 per cent mort­gages as op­posed to their pre­vi­ous best of­fer­ing of 85 per cent, ac­cess­ing these loans is still dif­fi­cult.

“While things are bet­ter they’re still not great. If you are 21, have a job and a ten per cent de­posit and want to buy your first home you’re still go­ing to strug­gle to get a mort­gage. That’s be­cause you’ll have very lit­tle credit his­tory.

“If you are 25 and up­wards you have more of a chance be­cause you’ll have more of a credit pro­file . Most likely you’ll be in your 30s.”

The Govern­ment and de­vel­op­ers have at­tempted to help first time buy­ers of newly­built homes.

They re­cently an­nounced the launch of the Mort­gage In­dem­nity Scheme, which will start in March. The Govern­ment and de­vel­op­ers will pro­vide a guar­an­tee for up to 100,000 new mort­gages at up to 95 per cent loan to value for new build prop­er­ties in Eng­land. It will be avail­able to ev­ery­one ex­cept in­vestors and sec­ond home own­ers. How­ever, first-time buy­ers will re­main an en­dan­gered species for at least the next year, ac­cord­ing to Rightmove.

The site says its re­search shows that only 23 per cent of peo­ple who in­tend to buy a home in the next 12 months will be buy­ing for the first time – down from 26 per cent a year ago. The sta­tis­tics com­pare with 40 per cent pre­credit crunch.

The first-time buyer is still daunted by the size of the de­posit they ex­pect to have to put down: 56 per cent ex­pect to have to pay over £20,000.

Miles Ship­side, di­rec­tor of Rightmove, says: “The first-time buyer re­mains an en­dan­gered species. With prospec­tive first­time buy­ers even thin­ner on the ground than at this stage last year, sell­ers and their es­tate agents op­er­at­ing at the lower end of the mar­ket will need to fully un­der­stand the DNA of this group if they are to cap­ture a sale.”

Rightmove’s lat­est study shows that the av­er­age age of some­one plan­ning to be a first-time buyer in 2012 will be 32.

Miles adds: “There has been a lot of spec­u­la­tion about the av­er­age age of first-time buy­ers, and the truth is those who can are in their early 30s, while those who can’t are in their mid-30s and count­ing.”

He claims that many peo­ple cur­rently rent­ing were un­able to raise the money for a de­posit and face hav­ing their dream of home own­er­ship post­poned un­til their 40s at best. That’s be­cause lenders are much more in­ter­ested in sec­ond- and third-time buy­ers with plenty of eq­uity. They are also be­com­ing in­creas­ingly happy to lend to in­vestors.

The num­ber of buy-to-let mort­gages plum­meted in 2008 but niche and ma­jor lenders are in­creas­ingly keen to of­fer them. Most want a de­posit of 25 per cent, though one or two will ac­cept 20 per cent.

Franz Muelthaler says: “Most of the work I have done this past three months is for buyto-let in­vestors. They are a mix of pro­fes­sional in­vestors and novices. These mort­gages are rel­a­tively easy to get as long as you have a clean credit his­tory and a de­posit be­cause what lenders re­ally want is to know that the rent cov­ers the mort­gage with some left over for voids and re­pairs.”

Lenders have also re­laxed their ap­proach to re­pos­ses­sions, ac­cord­ing to Peter Lead­bet­ter, who pre­dicts that numbers will con­tinue to fall. The Coun­cil of Mort­gage Lenders (CML) pre­dicted 40,000 re­pos­ses­sions in 2011 but the most re­cent to­tal stands at 27,500.

“Any­one tak­ing out a mort­gage should re­mem­ber that although in­ter­est rates are low, the only way is up.”

Franz says: “I think we’ll have an­other year with the base rate at 0.5 per cent but it will go up in 2013.”

FROM A BY­GONE AGE: The house is full of orig­i­nal fea­tures, thanks to the pre­vi­ous owner who had not had the prop­erty mod­ernised. The Bar­wicks kept these fea­tures while up­dat­ing the prop­erty from the top down and turn­ing it into a fan­tas­tic fam­ily home.

KEY TO THE FU­TURE: The first-time buyer re­mains an en­dan­gered species, even though in­ter­est rates are low.

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