First time home buyers will be eagerly awaiting the Budget announcements, looking for help to get on the property ladder.
The government are set to offer incentives to lenders to encourage them to bring back the 95% mortgage, which has all but disappeared.
The treasury is keen to stimulate high loan to value lending so that more people are able to buy their first home.
Some forecast a fall in UK house prices brought about by the slump in the economy and jobs being lost, which will also be great news for those in a position to buy.
The Office for Budget Responsibility, the government’s official forecaster, said this will be a short-lived boom and will lead to a medium-term downturn in the market. They predict a price drop of anything between 2% and 22% in the longer term.
Those in stable jobs with savings will be able to benefit from the falling prices. However, the typical first-time buyer will still be faced with several hurdles before they get the keys to that illusive first home of their own.
Lindsay Judge, research director at The Resolution Foundation, commented: “Although prices are projected to fall, perhaps dramatically, this drop won’t make things any easier for typical young first-time buyers looking to purchase their first home.
“The current crisis looks set to deepen pre-existing inequalities and the growing divide between those who are able to look forward to home ownership, and those for who this is a dream is increasingly out of reach.”
Lenders will want to protect themselves against borrowers being unable to repay their loans.
Last year, Nationwide, one of the UKs biggest mortgage lenders, altered their rules on deposits, thwarting the hopes of those trying to get on the housing ladder with the help of their parents.
Because of the uncertainty with the economy, Nationwide introduced a limit on how much help borrowers can have with their deposits. To get a 90% mortgage with a 10% deposit, borrowers must now prove that they saved at least 75% of the deposit themselves.
Fully gifted deposits are currently only accepted on loans up to 85% of the property value. Nationwide said that they hoped that this was just a temporary measure, but they needed to be cautious.
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