Property News

Millions of Households still Unable to Buy their First Homes since the Financial Crisis

Rose Jinks - February 13, 2019

More than 2.4m households who were expected to have bought their first homes after the financial crisis are still unable to buy, research finds.

The Intermediary Mortgage Lenders Association (IMLA) found that almost five million borrowers would have been expected to buy their first homes since the financial crisis, but only 2.5m people became first time buyers since 2008.

The trade body warned that, although low mortgage rates are supporting borrower affordability, high house prices and regulatory constraints on lending are still key barriers to getting onto the property ladder.

The IMLA says that a significant jump in lending would be required to help those who are still waiting to purchase their first homes, but it predicts that the value of loans for home purchases will remain stable, at £156 billion this year.

The IMLA also warns that landlords are feeling the effects of the buy-to-let tax clampdown, and expects lending to drop by 6% over 2019, to a total of £36 billion, with landlords investing in 59,000 properties in the coming year, which is down from 66,000 in 2018.

Kate Davies, the Executive Director at the IMLA, says: “We have had a robust recovery in lending volumes since the low of 2010, and the continuing combination of steady inflation and low unemployment should underpin the housing and mortgage markets in 2019 and 2020.

“Intermediary-driven lending continues to go from strength to strength, as more people than ever turn to a broker to find the most suitable mortgage.”

However, she believes: “But the mortgage market isn’t fully functioning as one would expect. Record low rates and historically low loan-to-value ratios, coupled with cash and household equity being injected into the housing stock, are more usually associated with a continuing period of recession.

“These are symptoms of a market that has failed to support first time buyers and those moving up the housing ladder in the way it did for previous generations.”

Davies continues: “Although low mortgage rates are supporting borrower affordability, high house prices and regulatory constraints on lending make it harder for borrowers to move onto the housing ladder.

“With the mortgage market now following a gentle trajectory, it is a good time for policymakers and regulators to reassess the costs and benefits of the present regulatory structure, recognising that the impact on those locked out of homeownership can be considerable and lasting.”