The recovery in the English housing market could be slowed unless first-time buyers are offered mortgages with lower deposits in the wake of the coronavirus crisis, the UK's leading online property portal has warned
Rightmove PLC said Wednesday that a first-time buyers' deposit of 10% now averages 24,189 pounds ($29,387), jumping to GBP36,284 if a 15% deposit is needed.
At the start of the U.K.'s coronavirus crisis many lenders temporarily withdrew or capped high loan-to-value mortgages as it became difficult to carry out physical valuations. Moneyfacts Group, a financial-information company, warned that the number of mortgage deals available to choose from dropped from 5,222 before lockdown to just 2,566 at the start of May, with higher deposit deals bearing the brunt of the loss. Lenders have since begun to restore loan offers and loosen conditions as the lockdown eases.
"If lenders are able to offer more attractive lower deposit mortgages it would help sustain the recovery in activity," said Miles Shipside, Rightmove founder and housing market analyst. "If it can be done responsibly, with strict affordability criteria, then a return to more mortgage offers of 90% loan-to-value, or even 95%, could make a huge difference to someone having enough money now for a deposit or having to save up for another few years," he added.
There is a difference of over GBP58,000 between the biggest and smallest 15% deposits needed in cities in England, with the biggest needed in London and the smallest needed in Bradford, said Rightmove.
Write to Joe Hoppe at joseph.hoppe@wsj.com
The recovery in the English housing market could be slowed unless first-time buyers are offered mortgages with lower deposits in the wake of the coronavirus crisis, the UK's leading online property portal has warned
Rightmove PLC said Wednesday that a first-time buyers' deposit of 10% now averages 24,189 pounds ($29,387), jumping to GBP36,284 if a 15% deposit is needed.
At the start of the U.K.'s coronavirus crisis many lenders temporarily withdrew or capped high loan-to-value mortgages as it became difficult to carry out physical valuations. Moneyfacts Group, a financial-information company, warned that the number of mortgage deals available to choose from dropped from 5,222 before lockdown to just 2,566 at the start of May, with higher deposit deals bearing the brunt of the loss. Lenders have since begun to restore loan offers and loosen conditions as the lockdown eases.
"If lenders are able to offer more attractive lower deposit mortgages it would help sustain the recovery in activity," said Miles Shipside, Rightmove founder and housing market analyst. "If it can be done responsibly, with strict affordability criteria, then a return to more mortgage offers of 90% loan-to-value, or even 95%, could make a huge difference to someone having enough money now for a deposit or having to save up for another few years," he added.
There is a difference of over GBP58,000 between the biggest and smallest 15% deposits needed in cities in England, with the biggest needed in London and the smallest needed in Bradford, said Rightmove.
Write to Joe Hoppe at joseph.hoppe@wsj.com
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