Skipton Building Society has removed its maximum loan size cap for first-time buyers.
The move will in particular support the London and South housing markets, where first-time buyers can struggle to meet affordability criteria.
With average monthly rent payments in London estimated at £1,500, removing the maximum loan size cap will enable many more to get on the housing ladder.
Kris Brewster, Skipton’s head of products, said: “It’s important that we continually review our lending criteria, as we all know how fast the UK mortgage market changes. People who have good jobs, earning very healthy salaries, and have saved up large deposits, are still being priced out of the south and London markets. This move will enable more first-time buyers to move away from renting, and to get the keys to their first home.”
There are fears that first-time buyers are being squeezed out of the market due to the dwindling supply of suitable homes and ballooning property prices.
The latest Land Registry data shows the average house price in England and Wales is currently £189,901, with prices ranging from £97,581 in the North East to £534,785 in London.
Tougher affordability checks from lenders and rising house prices have made it increasingly difficult for first-time buyers with smaller deposits to get on the property ladder.
Low interest rates combined with the economic recovery have done little to reduce the need for rented housing, while house price inflation ahead of wage growth has pushed property prices out of reach for many.
A recent survey by homelessness charity Shelter revealed that first-time buyers trying to get on the property ladder will need to earn £64,000 by 2020.
According to the research, this is an increase of nearly a fifth on the £52,000 currently needed for a typical first time-buyer’s mortgage.
In addition, they would need a deposit of £46,000 to keep up with house prices, which have been projected to rise to £270,000 over the next four years.
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