The Institute for Fiscal Studies reported that house prices in England have risen by 173% over the past two decades and set that against average pay increases of just 19% over the same period for 25-34 year-olds – you can see the problem.
Back in the halcyon days of 1996, 93% of those who’d managed to save a deposit and borrowed up to four and a half times their salary could purchase a home. However, by 2019 that percentage had fallen by over one third.
Additionally, the reduced spending power of young adults and rents rising from an average £140.00 to £200.00 per week has made saving for a deposit an almost impossible task for many.
Sadly, this means that many young people struggle to borrow sufficiently to afford even the cheapest of homes in their area let alone purchasing an average priced one. This has also led to the inequality felt by young people when comparing themselves with their older generations.
The IFS believes the government needs to radically encourage an increase in the housing stock and lessen the planning restriction for development within the Green Belt.
However, we all know that the cogs that drive government policy can be very slow moving especially at a time of national and international crisis.
We believe once this crisis is over and it will be that a positive and immediate solution to the issue could be that some lenders will start to offer more generous affordability assessments to help re-ignite the housing market. Most mortgage brokers listed on cherryFind.co.uk will have access to these more generous arrangements in time.
When lenders return to the market it is likely they will become more flexible with their criteria and that means that some will re-commence accepting gifted deposits from family members.
Most likely there will be lenders who will allow deposits to come via additional security on family members’ mortgage free homes once this current impasse comes to an end.
Get in touch with a mortgage broker near you to find out how you may be able to get onto the property ladder.