First time buyers dealt a “body blow” by the mortgage drought

The overwhelming majority of UK adults say that the difficulty in getting mortgages is a serious problem, with those hardest hit being first time buyers and those trying to take a first step up the property ladder, according to the 2015 Homeowner Survey by HomeOwners Alliance and myhomemove.*

The difficulty of getting a mortgage or remortgaging is now one of the biggest housing concerns of UK adults, with more than 7 out of 10 saying it is a serious problem. According to the survey, conducted by YouGov, 72% of adults say that the ability to get a mortgage/ remortgage is a very serious (32%) or somewhat serious (40%) problem. In contrast, only 3% of adults say it is not a problem at all.

There has been growing concern about the difficulties of getting a mortgage following the introduction of new tough regulations to prevent a return to reckless lending by banks and building societies. The new regulations led to a drop in mortgage agreements, and despite a subsequent recovering, mortgage approvals have slowed sharply in recent months. This puts homebuyers, who need mortgages, at a disadvantage to cash buyers who tend to be domestic and foreign property investors.

The perception that it is difficult to get a mortgage/ remortgage is seen across all groups in the UK. The large majority of people in every age group, every socio-economic group, in every sector of the housing market, and in every region of the country, say that getting a mortgage or being able to remortgage is a serious problem.

However, those groups who are most likely to say that getting a mortgage or remortgaging is a serious problem include:

  • Non homeowners who aspire to own their first home, 78% say it is a serious problem
  • Those at the bottom of the property ladder, with 78% of those with properties worth less than £125,000 saying getting a mortgage/ remortgaging is a serious problem. By contrast, 67% of those in properties worth over £350,000 say it is a serious problem
  • Divorced and separated people, of whom 80% say getting a mortgage/ remortgaging is a serious problem. In contrast, 71% of married couples say it is a serious problem.
  • The Welsh, with 81% saying getting a mortgage/ remortgaging is a serious problem. The region of the UK with the lowest level of concern in this area is the North East, with 65% citing getting a mortgage/ remortgaging is a very or somewhat serious problem.
  • Interest-only mortgage holders are also more inclined to view the ability to mortgage/ remortgage as a problem with 79% of interest-only mortgage holders versus 72% of UK adults generally saying it is a problem

Paula Higgins, Chief Executive of the HomeOwners Alliance said: “Despite all the talk of help, people from all walks of life say that getting a mortgage is a major hurdle to getting on the property ladder. This is another body-blow to those aspiring to own their own home, or those hoping to move up the property ladder. We have gone from one extreme to another – from it being too easy to get a mortgage before the crisis to too difficult now. With a desperate shortage of houses and sky high house prices, for many their mortgage difficulties will be the nail in the coffin of their dream of owning a home. We hear increasing numbers of stories of people who not only have had to pull out of buying their home but also families who are trapped because they are denied the opportunity to remortgage even with a good payment history. Banks, building societies and regulators need to apply some common sense by ensuring the new rules are proportionate and applied sensibly.”

Doug Crawford, CEO of myhomemove, said: “The result of the survey highlights the importance of homeownership, particularly for first-time and young buyers. Buying a property is often seen as an important milestone in adult life, yet difficulties securing a mortgage have meant that many are waiting longer to take their first step onto the property ladder.”

“The introduction of MMR last April threatened to polarise the market, however myhomemove data shows that the percentage of first-time buyers entering the conveyancing process has returned to pre-MMR numbers. Looking ahead, greater availability of low-interest rate mortgages, more competition between lenders and stabilising approval rates create an ideal opportunity for first-time buyers to own their own home.”

Getting a Mortgage/ Remortgaging Housing Concern – By Age, Marital Status, Homeownership, Mortgage Type, Value of Home, Region (2015 Homeowner Survey)

* The full 3rd Annual Homeowner Survey, a state of the nation report covering concerns and issues faced by UK homeowners, will be released on Monday 23rd March 2015.

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