Mortgage hunters are scrambling to make the most of greater access to 95 per cent mortgages, according to new findings from broker Mortgage Advice Bureau.
The MAB research shows that 40 per cent of UK adults are planning to buy their first home, move house or remortgage before the end of 2016 – when the Help to Buy scheme is due to finish. More than one in ten (12 per cent) are actively seeking a new mortgage deal within the next twelve months – with many attracted by increasing options for buyers with low deposits.
Among those seeking a mortgage within the next year, half are looking to buy a first home (50 per cent) while 35 per cent plan to move house. The remaining 15 per cent want to remortgage an existing home.
Buyers respond to 95 per cent mortgage offers
More than one in four active mortgage seekers (26 per cent) can only afford a 5 per cent deposit, emphasising the importance of greater lending in the 95 per cent loan to value (LTV) range as promoted by the Help to Buy mortgage guarantee.
Just one in five (20 per cent) can put down a deposit of more than 20 per cent, while the majority (61 per cent) are looking for deals with a maximum deposit of 10 per cent.
The typical income of mortgage seekers is £32,313 – marginally lower than the average income of first time buyers since 2009 (£33,485 – CML).
This suggests the return of 95 per cent lending is beginning to release pent-up demand and also attracting borrowers with the means to manage their mortgage payments once they overcome the initial deposit hurdle.
Help to Buy reduces burden on Bank of Mum and Dad
Fewer than one in three people seeking a mortgage in the next year can afford to buy or move without outside help (32 per cent) – underlining the value of government support for aspiring homebuyers.
Help to Buy has eased the burden on the ‘Bank of Mum and Dad’ and offered new hope to those whose relatives cannot boost their deposits. Among active mortgage seekers, 28 per cent can only afford to buy or move with government help while 26 per cent are relying on financial help from family.
Across all existing homeowners, 15 per cent struggled to save a big enough deposit to get a mortgage for their current home. Despite better market conditions for first time buyers in the past, almost one in ten homeowners (9 per cent) still wish Help to Buy had existed when they bought their first home.
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