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Abbey to the rescue of first-timers

Right now there are many things you don’t want to be – connected to arms dealers in Saudi Arabia, a contestant on Big Brother or a first-time buyer.

Thousands of column inches have been de-voted to the struggles of those looking to make their first steps onto the property ladder.

And now Whitehall’s newly-formed National Housing and Planning Advice Unit warns that consumers will have to find 10 x income to buy property in the future. If things weren’t bad en-ough, they just got worse.

While this isn’t predicted to happen for an-other 20 years, it shows the way things are going – up. Average first-timers now pay something close to 7 x salary and are about 34 years old before they’ve saved enough cash for a decent deposit.

But if this latest survey is anything to go by, it won’t be long before many people are pushing 40 before they can buy their first home.

Rather unhelpfully, Labour deputy leader wannabe Peter Hain suggests shifting the Stamp Duty burden from buyers to sellers to help solve the problem.

This would probably only lead to vendors increasing the prices of their homes to recoup the costs, potentially making things worse.

I finally clambered onto the ladder just over two years ago, having saved for many years for a deposit. It’s a frustrating place to be and I was tempted to borrow massively to buy a home.

But other people jump in head first, don’t save deposits and fail to spend enough time considering the inherent affordability problems if the Bank of England keeps raising the base rate.

They also face higher mortgage rates and sneaky fees. So I was sceptical when I saw Abbey publicising its intention to enter the 100% LTV mortgage market.

Would it demand higher lending charges or not allow clients to borrow enough money to buy property without deposits? But my scepticism was misplaced. Abbey is blazing a trail by entering the 100% LTV club and not charging higher lending fees – on its initial range of deals anyway.

It also says it is operating a flexible affordability policy, which according to many brokers is a genuine claim, not a mere sound bite.

So with a big high street lender like Abbey offering a range of fixed and tracker rate deals without asking for deposits or demanding HLCs, the industry is starting to show its commitment to first-timers.

We just need other lenders to follow suit and many of those people who have given up trying to buy may come out of the woodwork. And with house price inflation finally slowing, many more could join them this summer.

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