Prime Minister Boris Johnson’s plans to create Generation Buy to allow more first-time buyers to get onto the housing ladder is welcome but other factors, such as rising property prices are also part of the problem, according to Nisha Vaida at Bankrate UK.
Boris Johnson is planning to get more prospective homeowners on the property ladder by offering lower deposits to help with affordability.
The Prime Minister, who spoke exclusively to The Telegraph, has asked ministers to work on plans to allow more mortgages to be offered with a 5% deposit to lower the average of 15 – 20%.
Banks would also no longer be required to ask applicants about the finer details of their earnings and outgoings, which hopes to allow around 95% of loans to be accepted.
The government would also take on some of the loan risk in the form of a state guarantee, according to the new proposals.
Nisha Vaidya, mortgage expert at Bankrate UK, said: “It’s a particularly tough time for first time buyers at the moment, so government efforts to support them are certainly welcome.
“Although the withdrawal of low deposit mortgage deals from the market is undoubtedly part of the problem, it’s also clear that soaring house prices have prevented many first-time buyers from getting on the property ladder.
“Any plans to reform the mortgage market need to be combined with a renewed focus on increasing the supply of affordable housing that young people can access.
“Positively, last month the government announced the Affordable Housing Programme which is intended to fund up to 180,000 homes between 2021 and 2026.
“We’ve seen during the pandemic that many potential first time buyers have put their plans on hold by up to a year as they wait to see how conditions change in the housing market.
“Rather than wait for government interventions, these prospective buyers can take the initiative by reading up on the different financial support and mortgage products available, and by tracking monthly house price changes to see how the market is adjusting during these turbulent times.”