The return of 100% mortgages
Last Wednesday, Barclays launched its first 100% mortgage since the financial crisis. They are not the first bank to introduce such loans in recent years: Aldermore launched one in 2011, followed by a few other building societies. However, this still represents a significant change in the mortgage market, which had battened down the hatches in the wake of the crisis and fears about subprime loans. This is part of the step towards banks becoming much more willing to lend, particularly to first-time buyers.
Those choosing to take out Barclays’ new mortgage, with no deposit at all, will have to find a willing family member or guardian to support them. This guardian must stump up 10% of the purchase price in cash, and leave it with Barclays for three years. However, during this time, the money will continue to earn interest, and they can have it back at the end.
This is a far better deal than many parents of so called Generation Y are currently facing. Barclays’ new mortgage plans were produced in response to research which revealed that 35% of prospective first time buyers are only able to get onto the property ladder with the financial help of their parents. According to Barclays, 20% of these loans from the ’Bank of Mum and Dad’ are never paid back. In fact, a report by L&G revealed that lending from parents to help their children with their first property purchase will account for 25% of all mortgage transactions in 2016.
Although some have expressed concerns about the return to 100% mortgages, their very existence is a symptom of the wider housing crisis in this country. Although the ‘Help to Buy’ programmes have encouraged and assisted people onto the housing ladder, the average first time buyer in this country is still in their 30s. Faced with extortionate rent prices, one can understand why young people find it difficult to save.
Across the country, what we need is more homes. More small, affordable properties for first time buyers. More family homes for those with children who need more space, and more retirement properties so that older people find it easier to downsize. There is support for the development of these homes too. In fact, research conducted by MPC, and the prominent housing charity Shelter, demonstrates that those who support development outnumber those who are against by a ratio of 5:3. They just need to be identified, and given a platform to voice their support.
Admittedly, this is easier said than done. Those who oppose development often do so vehemently. In our experience, opponents usually have more time to rally others and bolster their campaign than supporters do too. But rest assured, they may shout loader, but they are not in the majority.
If you need help identifying supporters and giving them a voice, Meeting Place Communications have a range of supporter motivation techniques and products to suit your project. Get in touch on 01225 422243 to speak to one of the team about how we can work to help you achieve consent for your scheme.
This article was written by Account Executive Emma Benson