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Countrywide highlights barriers to mortgage market

Robyn Hall

November 19, 2012

Over 2,000 adults were surveyed including private rental tenants, homeowners with mortgages, shared equity stakeholders, owner occupiers and those living rent-free.

Grenville Turner, chief executive of Countrywide, said: “Banks need to be encouraged to lend at more favourable rates with the introduction of higher loan to value mortgage products to enable prospective buyers with a deposit of 10% or even 5% get on the property ladder.”

The research also highlighted several major barriers to the housing market’s recovery and identified trends in consumer confidence since the last study took place in March 2012.

BARRIERS

Job insecurity

This was most prevalent among 35-44 year-olds as 19% cited this as a reason for not buying at this time. And 12% of all UK adults surveyed cited a lack of job security as a reason for not buying.

Employment status

Nearly 1 in 10 (9%) of respondents who have had an unsuccessful mortgage application cited being self-employed as the main reason they were unsuccessful in their most recent mortgage application and 11% were not given a reason why their mortgage application was unsuccessful.

YOUNGER GENERATION

Repayment affordability

Some 18% of 25-34 year olds advised that being unable to afford mortgage repayments was preventing them from buying a property at this time.

Living arrangements

More young adults were unhappy where they currently lived with only 40% of 18-24 year-olds and 41% of 25-34 year-olds claiming that ‘being happy where I live’ is preventing them from moving – a drop from 45% and 47% respectively when asked a similar question in March 2012 survey. Some 35% of 18-24 year olds are private renters.

HOME OWNERSHIP

Mortgage uptake

Homeownership for the majority is financed with a mortgage or loan with over half of all 35-44 and 45-54 year-old adults confirming they owned their home through a mortgage or loan. And 77% of UK homeowners believe the value of their home will have stayed the same or increased in value in 12 month’s time.

RENTAL MARKET

Rental prisoners

Nearly two thirds (63%) of private renters quoted deposit affordability as a factor preventing them from buying at this time compared to 56% when asked a similar question in March 2012 survey.

Tenants

27% of all UK respondents are currently renting of which 15% are renting privately, 6% from a housing association and 5% are living rent free.

Tenants saving to buy

Nearly a third (30%) of private renters planned to use their savings to raise the necessary deposit to get on the housing ladder in the next three years. Similarly a third (34%) of 18-34 year olds said they will use savings for the deposit needed to buy their first home.

Renter’s happiness with current property: Only 29% of private renter’s referenced happiness with their current property as a reason for not buying at this time compared to 32% in March 2012 survey.

Turner said: “These findings reaffirm what we see on a daily basis. The shortage of appropriate housing at the right price coupled with lending issues is creating a perfect storm for the housing market.

“While many continue to see home ownership as a good investment with 77% of all UK homeowners believing the value of their home will have stayed the same or increased in value in 12 month’s time, it is disappointing to see that less people are happy where they currently live than when asked a similar question in March 2012 survey.

“However the issue of deposit affordability remains the major barrier to purchasing a home for renters and we have been calling for some time now for meaningful mortgage targets to strong-arm higher loan-to-value lending.

And he added: “Restoration of the mortgage market would help unlock the current stagnated property chain with the availability of more accessible mortgages so that prospective property purchasers, both first-time buyers and downsizers, can buy their home at a price they can afford and in a location they want to live in.”


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