Help
Mortgage alert: Govt put 95% mortgages back on the table
| Author: Craig Bees | Published: 20th October 2020 11:22 |
Govt set to relax mortgage eligibility rules for first time buyers
Good news for first time mortgage buyers with a strong indication last week that the Government are planning to relax the rules around mortgage eligibility and get up to 2m first-time buyers onto the property ladder.
Prime Minister Boris Johnson said that the government’s intention is to “fix the broken housing market” and to “turn generation rent into generation buy” although he was careful not to give any timeline on this.
As a result of the coronavirus lockdown earlier this year, banks have tightened some of the rules around mortgage eligibility making it increasingly difficult to find mortgages with a loan-to-value of more than 80%. This means that first-time buyers would need to save up for a deposit of around 20% although an exception to this is the Help-to-Buy scheme, which offers the option of buying a newly built property with a 5% deposit.
The latest bank tightening has had an unwanted impact on buyers who could afford the monthly mortgage payments but don’t have the lump sum of cash needed for a large deposit. The age group most affected by this are those between 20-40 years old.
Mr Johnson has suggested that a new scheme could be introduced in which first-time buyers would be offered long-term fixed-rate mortgages with a 5% deposit option – potentially great news for many hopeful homeowners but how will it be achieved?
More details are expected in due course but we do know that mortgages with smaller deposits would mean banks are lending more and taking greater risks – one of the main issues that would need to be addressed.
One way the government could deal with this is by offering some form of ‘state guarantee’, in which it absorbs part of the risk, effectively agreeing to take a portion of the hit should a buyer fail to repay what they’ve borrowed. This is somewhat similar to what the Help-to-Buy scheme offers eligible first-time buyers buying newly built homes. Watch this space for the latest updates.
There was less detail given on the proposed planning changes although the Prime Minister did promise to “transform” the planning system, saying the government will make it faster and easier to build new homes without threatening the green belt or countryside.
Earlier this year the government introduced a number of measures with the hopes of simplifying and speeding up the process of applying and granting planning permission for certain projects.
This includes the following:
- An easier process for homeowners to build additional space above their properties via a fast track approval system.
- A wider range of commercial buildings will be allowed to change to residential use without the need for a planning permission.
- Greater flexibility for commercial properties to be repurposed without applying for permission eg a retail shop could be changed into a café or office with less bureaucracy.
The current government is also promoting environmentally friendly homes with the launch of the Green Homes Grant scheme.
Monthly draw: still time to enter this month’s draw (closing date is next Wednesday October 28 2020) with your chance to win a case of Italian wines (red/whites/mixed) or one month’s membership at Whittlebury Hall Leisure Club.
If you’re thinking of selling or letting your property and want to win one of these great prizes on offer call (01327) 359164 and speak to our sales or lettings team.
Until next time.
Craig Bees, MD Bartram & Co
E-mail me at craigbees@bartramandco.co.uk
Visit our website www.bartramandco.co.uk and follow us on Twitter@bartramandcotow
Tel: (01327) 359164
Fax: (01327) 359166
Report this article as inappropriate
Comments
You need to log in before you can do that! It's only a quick registration process to join the AMA network and completely free.
Loading...
Help