August 5, 2021

MP Now News

Mortgage News

COVID ‘created challenging conditions’ for UK mortgage market

BLACKBURN, ENGLAND - APRIL 29: Posters from various real estate agents promoting properties for sale in Blackburn, England on April 29, 2021.  (Photo by Nathan Stirk / Getty Images)

UK banks have launched a new government sponsored program designed to help first time home buyers or current homeowners secure a mortgage with just a 5% deposit. Photo: Nathan Stirk / Getty Images

The coronavirus pandemic has halted home ownership plans for potential UK first-time buyers.

Three in ten potential homebuyers have suspended their plans to buy their first property due to COVID-19, a new one study from NerdWallet has revealed.

The survey of 600 Britons who do not currently own a property but want 24% of respondents to expect to buy their first home within the next year.

Almost a third (30%) of potential first time buyers delayed their plans to buy a home due to COVID-19, but 70% of hopeful buyers are confident that they will buy a home within the next 10 years.

“COVID-19 has created difficult conditions for the UK mortgage market,” said John Ellmore, director of operations at NerdWallet. “The resulting economic volatility has caused some mortgage lenders to tighten their lending criteria and as a result, some first-time home buyers may find it more difficult than usual to apply for a mortgage.”

Meanwhile, 57% are considering or planning to take the 95% federally supported mortgage. Another 35% expect financial help from a family member, guardian, friend or partner to pay their home security deposit.

“On the positive side, however, the British are taking steps to prepare for mortgage applications – and that should be a sign of better things,” added Ellmore.

Continue reading: Everything You Need to Know About 95% Mortgages

UK banks have launched a new government sponsored program designed to help first time home buyers or current homeowners secure a mortgage with just a 5% deposit.

The program, which opened for applications in April, follows Prime Minister Boris Johnson’s pledge to help “Convert generation rent into generation purchase”“At the Conservative Congress last October.

95% mortgages mean first-time buyers or current homeowners can get a mortgage up to £ 600,000 ($ 846,450) with just 5% down payment.

The UK government will, subject to the usual affordability tests, give lenders the guarantee they need to provide mortgages that cover the other 95%.

The 95% Mortgage Guarantee is available from lenders in High Streets across the country with Lloyds Banking Group (LLOY.L), Santander (BNC.L), Barclays (BARC.L), HSBC (HSBA.L) and NatWest (NWG.L), which today launches mortgages under the scheme.

The UK property market has soared to record highs amid the pandemic, boosted by the stamp duty reduction and 95% first time mortgage guarantee system.

UK house prices rose as fast in March as they have for nearly 14 years after Sunak announced the extension of stamp duty leave. House prices rose 10.2% in March 2021, up from 9.2% in February of that year. This was the UK’s highest annual growth rate since August 2007 official numbers.

Clock: How Much Money Do I Need to Buy a Home?