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Financial crisis has delivered fatal blow to aspirations of UK homeowners, says IMLA

The fallout from the financial crisis has delivered a fatal blow to a generation of aspiring homeowners, with just a third of young households likely to be owner-occupiers by the end of the decade.

That amounts to little more than half the number of those aged 25 to 34 who owned their homes in 1993, according to a report.

The Intermediary Mortgage Lenders Association also warned that the peaks of mortgage lending seen before the credit crunch will not be revisited. Rather than the £360billion lent in 2007, the report suggests the 'new normal' would be less than around £200billion annually.

Young couples: Far fewer young households ¿ aged 25 to 34 ¿ are likely to be owner-occupied by the end of the decade

The IMLA, which represents mortgage lenders operating through brokers, said that homeownership levels will continue to fall if policies and regulation that impact on the mortgage market are not reformed.

  More... Mortgages for first-time buyers fall in April but lenders insist the market is improving Hard-up parents having to help children up the property ladder What next for mortgage rates and should you fix? The first-time buyer's guide to getting a mortgage and climbing onto the property ladder Compare the best mortgage rates and get free professional advice

 

Despite 'short-term, counter-cyclical' initiatives such as the Funding for Lending Scheme and Help to Buy being introduced, the report mourned the absence of a wider debate on the property market and mortgage lending, which Lord Adair called for when launching the Mortgage Market Review 18 months ago.

The report argued that regulatory requirements on banks mean the supply of low deposit mortgages will remain limited, blocking first-timer buyers from the recovery.

And FLS, which provides banks with cheap funding, is scheduled to end at the start of 2015.

Peter Williams, the IMLA’s executive director, said: 'Generations of Britons have been raised with the ambition of owning their own homes, which has become a key part of our national identity.

'But this goal threatens to disappear from view unless we consider what kind of market we want to create for the future and what can be achieved within the scope of mortgage regulations and available finance.'

Mr Williams added: 'There is a clear onus on lenders to ensure mortgage products are simpler to understand and provide customers with a long-term service that caters to their evolving needs.

'Beyond that, we urge the government to recognise and act on these critical issues that will shape the future of the market, so we are not left dealing with unintended consequences further down the line.'

Lending to first-time buyers fell for the first time in four months in April, according to figures from the Council of Mortgage Lenders yesterday - though lenders insisted the sector was continuing to strengthen.

CML said loans to first-time buyers in the first four months of this year were still 11 per cent higher than for the same period last year.

Average deposit values for first time buyers also fell to 19 per cent in April from 20 per cent the previous month, suggesting lender demands for higher deposits from would-be homeowners were easing.

Total mortgage lending was 5 per cent higher in the month, spurred on by a surge in remortgage activity from March to April.






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