First-time buyers must jump through 'affordability hoops', says Foundation Home Loans

Foundation Home Loans

First-time buyers face having to jump through the "affordability hoops" in the light of he annual rate of house price growth picking up, says Foundation Home Loans chief Jeff Knight.

According to the Nationwide house price index, prices grew by 3.2 per cent at the start of 2018, compared with 2.6 per cent at the end of 2017. And house prices increased by 0.6 per cent over the month, after taking account of seasonal factors, which is the same increase recorded in December.

And Mr Knight said: “Annual prices may have risen, but borrowers are starting the year with a modest wage growth as well as the effect of an increase to the base rate from the Bank of England.

"The cut to stamp duty for first-time buyers has certainly nudged up growth, but it remains to be seen whether this alone helps them to jump through the other affordability hoops.

“Securing the finance to purchase a property can be challenging enough, even more so for those with previous blips on their record.

"It’s therefore crucial we start the year as we mean to go on, ensuring all those trying to get a leg-up on the ladder are fully supported - as well as a joined up approach to addressing the supply issue that will develop houses for renters and buyers alike.”

Paul Osborn, chief executive for Foresters Friendly Society agrees that it is a "tricky environment" for first-time buyers.

He said: “For many, home ownership is the top savings priority, but it continues to be a tricky environment for first-time buyers. With house prices continuing to increase faster than wages, reaching that goal is going to be even trickier.

“Luckily there are products out there that can make a real difference. The Lifetime ISA (LISA), designed specifically to help those under 40 years old achieve their long-term savings goals, offers a 25 per cent boost to annual savings.

"But our research shows that although there’s strong awareness of the LISA, just 11 per cent of those eligible are currently taking advantage of these benefits.

"This highlights the need for improved education on the importance of fostering an early savings habit. Choosing the right product along the way will help bring the goal of home ownership that much closer.”


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