And even if borrowers manage to jump over these hurdles, they then run the risk of finding they can’t borrow enough money to buy their first home.
Recent research from Lloyds TSB suggests prospective first-time buyers are so intent on buying property that they are prepared to make some shocking sacrifices.
The bank has discovered that one in 10 18 to 24 year olds polled has decided to give up on attending university to save cash for a deposit on their first home. And one in five 22 to 24 year olds have redirected money originally earmarked for their pensions to buying property.
The research goes on to say that one in five of the people polled have opted for a better paid job they don’t particularly like over their first choice career and one in six are juggling two jobs to get on the ladder.
Some of this shouldn’t be taken too seriously and first-time buyers must expect to make some sacrifices. But deciding against attending university to fund house purchases is not an encouraging sign. In fact, it can only add credence to the arguments against the government’s imposition of Stamp Duty on first-time buyers.
Once again it is left to the product providers to look at ways to keep first-timer buyers in the game.
Abbey has recently taken its first steps into the world of 100% LTV lending and its flexible affordability approach, coupled with the absence of higher lending charges, should give its proposition validity in the marketplace.
And the Coventry-owned lender Godiva re-cently unveiled its two-year 125% LTV fixed rate MOREgage product at 6.44%, which eschews early repayment charges.
Coventry was the first to follow Northern Rock into the part secured, part unsecured sector and while this deal may not be the best rate on offer, its combination of payment security with no lock-in could carry some appeal.
But with the Council of Mortgage Lenders reporting that the proportion of first-time buyers’ income spent on interest payments is at its highest level since 1992, there has to come a point when lenders have to stop pushing.
There are no easy answers to the problems with first-time buyers, but the onus is on the government and the question of housing supply must be answered.