July 21st, 2017
Analysts and industry experts predict that, over the next three months, the lending options for buyers with a 25% deposit or less will start to decrease. The prospects for those with a deposit of 10% or less look worse still, with a severe lack of lending options available.
The prediction was made as part of the latest Bank of England Credit Conditions Survey, where lenders were asked to reveal their predictions for the market over the next three months. The anticipated drop in supply was attributed to a changing appetite for risk.
This will hit first time buyers hard, particularly contractors, freelancers, and independent professionals who often depend upon 90% LTVs.
Having looked at our own data, the statistics speak for themselves. 42% of all mortgage applications submitted between January – June 2017 were purchase applications. Of those purchase applications, 36% were first time buyers and 50% of these first time buyers had a 10% deposit or less.
It’s worth noting, however, that this climate could also prove beneficial to buyers. With many potential first time buyers being put off by the likely drop in availability of 90% LTVs, those who are prepared to invest now rather than save for longer will face less competition when it comes to securing a property.
According to the survey, lenders also reported that demand for prime lending has increased whilst demand for buy-to-let lending decreased significantly during the second quarter of 2017.
It is predicted that total demand for secured lending for house purchase will increase during the third quarter, thanks to an increase in buy-to-let lending and a minor increase in prime letting. Although re-mortgaging was reported to have decreased slightly during the second quarter, it is expected to remain unchanged going in to quarter 3.
In addition to this, lenders reported that the availability of unsecured credit to households had decreased during the second quarter, with further falls expected in quarter 3. This comes as the scoring criteria used for granting credit cards and unsecured loans tightened in the second quarter, with lenders expected to tighten it further still in the third quarter.
If you’re a first time buyer looking to invest in a property in the coming months, it’s vital that you consider the options available to you as early as possible and obtain accurate and up to date advice from an experienced mortgage broker.
Media Contact: Sarah Middleton, Public Relations Manager
Tel: 01489 555 080