Vesta Packaging has slammed lenders for failing to restart the first-time buyer market by sticking to outdated income multiples and mortgage terms.The company says stable house prices mean now is an ideal time for aspiring first-timers to re-enter the market. Vesta managing director Mark Leaper says the best ways to kick-start the market are to give first-time buyers the chance to raise mortgage advances and to keep mortgages affordable. He says lenders should increase multiples by offering at least seven times income and extend mortgage terms to 40 years plus. If they did this, he says, the UK could align itself with much of Europe and advances would reflect the market value of even the most basic properties. Leaper also says LTVs should also be pushed above 100% in a way similar to Northern Rock’s Together product. Leaper adds: “There won’t be a large house price drop such as the one in the early 1990s. Instead, there will be a long period of stable house prices – an ideal opportunity for first-time buyers to rekindle the market. The only problem is the multiples and terms most lenders are offering are relics of the past. “Four times income and 80%LTV might have worked in 1980 but there is no way it works today. Lenders must be more adventurous.” He claims there is pent-up demand for FTB products, saying Vesta has been snowed under with enquiries on a recently-launched 7.5 x single income product, and is also under pressure to provide more deals that offer 35-year terms and 125% LTVs. He adds: “We have a chance to rekindle this market and must not squander it because of a lack of imagination on the part of lenders.”
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