First-time buyer deals down 89% compared to 2006
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The number of 90% LTV mortgages originated, typically associated with first-time buyers, fell from 245,000 in 2006 to 28,000 in 2009, a decrease of 89%, shows a new report by Genworth Financial.
This has resulted in approximately 100,000 first-time buyers being excluded from the market year on year since 2006.
The Barrier to Home Ownership Report was produced in conjunction with Professor Steve Wilcox, chair of the Centre for Housing Policy at the University of York.
Angel Mas, president of Mortgage Insurance Europe at Genworth Financial, says since the credit crunch, lenders have withdrawn almost all high LTV mortgage products usually associated with first-time buyers and as a consequence, the majority of prospective first time buyers have been excluded from the market.
He says: “Not only does this have wide-reaching ramifications for the health of the UK economy as a whole, but the deposit barrier represents a new obstacle to social mobility. Ironically, there has never been a better time to get on the property ladder as interest rates and property prices are at an all time low.
“Yet the current deposit requirements ensure home ownership is kept firmly out of reach for all but a privileged few. This report examines in detail the disparity between supply and demand and draws on a wide range of industry data.”
Steve Wilcox, of the Centre for Housing Policy, University of York, says: “While the availability of capital for a deposit has been able to ease the affordability requirements for first time buyers in the past, the absence of a deposit was not, in itself, an absolute barrier to home ownership. Now, without some innovation in policies or products, the ‘wealth barrier’ to accessing home ownership is set to become just as important as the income barrier has been in the past.”
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