A recent survey commissioned by the Halifax and conducted by the Centre for Social Research has concluded that most of Britain’s potential first-home buyers don’t believe they’ll ever be able to realize that dream. Amongst the 8,000 people aged 20 to 45 surveyed, about 5,500 said that they have no real hope of purchasing their first home, though well over 6,000 said that home ownership was their goal.
By far the biggest impediment for first time home buyers is the mortgage lending market. The vast majority of those surveyed said that trying to obtain a loan was a discouraging process, and more than half said it’s almost impossible. Lenders do not want to provide affordable home purchase loans without a large down payment – up to 20% or more of the purchase price – and most young couples and singles just don’t have the necessary cash.
In fact, another report just published by the housing charity Shelter found that around 20% of the young adults in their survey were moving back in with parents, while another 20% said they plan to delay or abstain from parenthood in order to save enough money to buy their own home. Overall the reports concluded that more than nine out of ten hopeful buyers did not have the cash reserves required before lenders will finance a loan at reasonable rates.
Economic forecasters are calling the phenomenon “Generation Rent”, as they say that Britain is rapidly moving towards the European norm in which the majority of the population rents rather than owns their primary residence. They are concerned about the impact on the construction industry; if people can’t afford to buy a new home, builders can’t afford to build them. There is also the concern that life-time renters will have less security on retirement.
Halifax bank has reported that beginning in July they will offer a program to assist first-time buyers in their loan applications, hopefully making the process simpler. It will also help them to find other options if their application is denied.