The difficulties of taking that 1st step onto the UK housing ladder
Regardless of the struggles prospective homeowners are currently facing to secure a mortgage and find the right property at the right value, it is safe to say that most British households, as has long been the case, aspire to own their own home. However, the financial woes of the past few years have, understandably, created a more risk-averse public, which is something the current Government is now looking to address.
The Government is rolling-out a range of measures through equity finance instruments that limit risk, improve affordability and fund home buying, with the aim of boosting first time buyer confidence. Schemes like First Buy, which provides affordable new build housing to first-time buyers with a 5% deposit, are intended to share risk amongst the funders and buyer, as well as being of little or no burden to the public purse.
Another market-based product with comparable supposed benefits is a new partnership based mortgage aimed at middle-income households able to stump up a 20% deposit. This product involves an equity stake injection to lessen the risk of negative equity and, trusting that price increases remain limited, should reduce mortgage payments below those of a traditional mortgage scheme.
Clearly, some steps are being taken by those in power to address buyer-reluctance and stabilise the market. However, it is yet to be seen whether the relatively small number of incentives being introduced can achieve the right blend of risk, price, debt and target consumers to spark the intended revival of buyer confidence.
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