Buckinghamshire Update

Helping FTB’s overcome affordability challenges

We’ve experienced plenty of knock-on effects from the cost of living crisis and interest rate rises over the last couple of years. In terms of homeownership, first-time buyers are among those being hit the hardest. While getting onto the property ladder has become increasingly difficult in recent years, these struggles have been compounded by these interest and mortgage rate rises.

The issue was explored in a recent report by the Building Societies Association (BSA) which said it’s more expensive for first-time buyers now than at any time in the last 70 years.

Both the cost of buying and affordability are presenting significant challenges, while many of the proposed solutions designed to help were based on a low mortgage rate environment.

Buying a home now relies on securing a large deposit, and being able to demonstrate significant incomes that are higher than the average. It means people without access to big upfront sums, or those who are single or on low incomes, risk being excluded from owning a home altogether.

More young people have turned to the bank of mum and dad in recent years, but even when parents do want to help, they might not always have the funds to gift.

According to data from Statista, the number of first-time buyers in the UK last year was the lowest in 10 years, at 293,000.

Yet the number of first-time buyers is recognised as being closely related to the state of the mortgage market, housing market and then the wider economy – they’re intrinsically linked.

Supporting people to buy their first home

The BSA has called for the Government to work with lenders, the wider housing market and the public to ‘make homes more affordable, more available and more appropriate to the needs of those living in them and the world we live in’.

As lenders, we have to play our part in solving this issue. We must recognise the difficulties that our customers are facing. We have to listen to feedback from intermediaries about which criteria first-time buyers are struggling to meet and the factors that put them at risk of exclusion from the housing market.

We can then use this information to design products that meet the needs of people trying to get a mortgage today.

At Buckinghamshire Building Society, we understand that traditional routes to buying a home are not viable for everyone. We want to reopen doors that people may feel were closed to them.

That’s why we have launched our new joint borrower sole mortgage proposition, JBSP Deposit Lite. This combines the benefits of two existing products – JBSP and Deposit Lite – to help buyers take that first step onto the property ladder.

Solving the deposit and affordability challenge in one product

It provides a solution to both the deposit and the affordability challenge in one product from one lender, making life easier for all concerned; buyer, broker and lender.

A JBSP Deposit Lite mortgage makes it easier for parents to help their children buy a home. It comes with low to no deposit options enabling borrowers to purchase their first property by leveraging the equity from parental property.

Then to assist with affordability, up to two parents can also join the borrower on the mortgage, significantly improving their borrowing potential, but without the need for them to be co-owners of the home.

Parents can use up to 60% of the value of their own property to help their child onto the housing ladder and up to a 40-year term is available.

Subject to individual approval, we may also be able to accept equity in second homes or holiday homes.

We’re always looking to innovate, particularly where first-time buyers are concerned, as we appreciate it’s currently much harder to get onto the property ladder.

This combined product also simplifies the process for intermediaries and hopefully gives their customers a viable option for finally buying a first home.

Claire Askham is Head of Mortgage Sales at Buckinghamshire Building Society