Two-thirds of 20 to 45 year-olds have given up on home ownership
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Two-thirds, 64%, of non-homeowners believe they have no prospect whatsoever of buying a home, according to a new report.
Commissioned by Halifax and produced by the National Centre for Social Research, the report analysed the results of a survey of 8000 20 to 45 year-olds, and identified the emergence of Generation Rent.
The perception that banks are not lending, the size of mortgage deposits necessary, and a fear of the application process has prevented Generation Rent from making any significant attempts to buy a home. Longer-term, only 5% of this group are making sacrifices to save for a deposit. 95% say they have no spare cash, no interest in saving for a deposit or were trying to save but failing to do so.
Stephen Noakes, commercial director of Halifax Mortgages, says “Our research indicates just how many potential first-time buyers are not making it to the application stage because of a fear of being declined. We would like to help aspirational home buyers to realise they do have options, that they can apply for a mortgage, and that it is still possible to get onto the property ladder. At Halifax we approve 8 out of 10 mortgage applications from first time buyers, and it is important that today’s potential first time buyers don’t miss out because of the fear of rejection.”
The report revealed widespread pessimism about lenders and the mortgage application process:
- 84% say first-time buyers are put off by a belief that banks do not want to lend to them and find excuses to turn them down
- 92% see it as hard for first-time buyers to get a mortgage, with 60% seeing it as very hard or virtually impossible
- 67% believe there is a general perception that everyone is rejected by lenders so there is little point in applying
- 61% say that first-time buyers do not want to go through the stress and anxiety of applying for a mortgage
Alison Blackwell, NatCen report author, says: “The phenomenon of Generation Rent could have major socio-economic implications. It would mean fewer homeowners being able to buy and therefore fund the construction of the new homes required in the UK to meet demand, resulting in a slowing down in the housing market. It could open up a widening of the wealth gap that already exists between home-owners and non home-owners. And people in Generation Rent risk insufficient finances at retirement.”
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Readers' comments (6)
bobby | 31 May 2011 11:58 am
This is the result of lenders treating ftb's with contempt for nearly 4 years. They just give up. They require 25% deposit to get a reasonable rate, 90% mortgages are offered at disgraceful rates of around 6% and 3 in 4 are declined no matter what the Halifax say. Also the only deals at 90% for the last 3 years have been direct deals through banks. Brokers have had no access to 90% rates. The lenders will have a situation that when they do finally want to lend some money, people will not be interested and their mortgage book with evaporate over the years and in return their profits and the whole business model. They are there to LEND and clearly they still do not want to lend. This is a very bad business plan of lenders and they have started off the killing of their industry. FTB's and FTS'S are now renting and getting 2-5 year tenancies for stability and being unable to get a mortgage. They future housing market will be made of cash buyers, buying and renting as a pension income and buy to let magnets with large portfolio's. IS this what you want lenders ?, well tough its what you've got now.
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housing policy wonk | 31 May 2011 3:23 pm
WHy keep pussyfooting? the answer is that house prices need to fall much further to put them within reach of most FTBs, over-generous lending in the run-up to the crash inflated a bubble in house prices which has still not deflated. Until we et house prices on a sensible level this sort of nonsense will continue. buy ot let is a huge part of the FTB's problem, investors and FTB's compete for the same properties, of COurse the Governamnt is so keen on home ownership that it gives BTL investors full tax relief on their interest payments, hence the orgy of interest only lending which BTL landlords have caused.
BTL should only be possible where investors get together to build new developments for rent. Existing property should be ring -fenced for FTBs.
teh BoE should ease thepath of lenders who are prepared to allow hosue prices to reach their true level, this will start happeneing as soon as interst rates return to normal levels.
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Anonymous | 31 May 2011 3:55 pm
Good to see 'bobby' isn't being totally dramatic and reactionary.
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Anonymous | 31 May 2011 6:58 pm
Lenders have no idea on how to help FTB's - what about shared ownership, shared equity - these lender that offer these mortgages still require 10- 25% deposit and even more for some new builds developements.
No body seems to want to help FTB's the lenders have so many hoops that FTB's need to jump through to get approved, you can understand why they are put off!
This all needs to change and fast if we are going to get people out of rented accomodation and owning their own home.
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exx | 31 May 2011 7:38 pm
"That is a pathetic number and the results are likely to carry an error margin of around 25%"
I am not statistician but I would expect less than 6% error margin with such a not-so-small sample size. Maybe someone else is having an agenda?
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Anonymous | 1 Jun 2011 11:37 am
Anon - 31st May, 6:58pm.
I agree. What lenders need to do is go out into the streets, accosting people to offer them 100% mortgages whilst offering to wipe off their unsecured debt. The ones that don't have jobs will be given a job for life, with a gilt-edged pension. Only after they've been directed through a broker, of course.
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