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Many new buyers getting help from parents

December 1, 2008 by admin  
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A recent study has shown that many first time buyers are getting help from their parents in the current financial climate, especially when it comes to getting a mortgage. Conditions in the mortgage and financial sector have become increasingly difficult, and for many first time buyers getting a mortgage has become very difficult or even impossible. This has resulted in an increasing number of first time buyers turning to their parents for help in order to boost their chances of getting a mortgage in the current market.

It is estimated that almost 50 percent of first time buyers aged thirty and under are now seeking assistance from their parents in order to get a mortgage and get their foot onto the property ladder. In 2006 just 38 percent of first time buyers within this age group received parental help to get a mortgage, showing that the figure was rising as a result of the current credit and financial conditions.

With 100% mortgages being pulled from the shelves and lenders demanding higher deposits many first time buyers have started to find it more and more difficult to secure a mortgage despite falling house prices.

An official from the Council of Mortgage Lenders stated: “In the current market environment, 100% mortgages are not so widely available. Many lenders typically require a higher deposit from borrowers than before. So even though the total needed to buy a house is declining, first-time buyers are facing a new affordability challenge in the shape of a higher deposit required by lenders.”

The CML went on to state: “In London, the typical assisted first-time buyer had a £67,000 deposit and an average income of £42,000. In very stark contrast, unassisted buyers in the capital had a typical deposit less than a third of this size - just £19,000 - but typically need a much higher income of £57,000.”

It added that the recession could mean that parents are no longer able to help their children with mortgages, stating: “If this flow of help for young buyers dries up, then opportunities for young would-be buyers to enter the market could be severely limited, and we may see their numbers decrease significantly beyond what are already record low points.”

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