As the average age of the first-time buyer gets higher and higher, millions could be at risk of becoming ‘OAP mortgagees’ as repayments stretch into later life. Many are being forced to rent for much longer than intended because of an insecure job market and tough credit conditions. More than a quarter of private tenants currently seeking to buy are estimated to be in their forties. Those more mature buyers, that successfully get onto the property ladder, will be faced with a mortgage whose term is less than the 25-year norm, or will end up facing repayments into their sixties, and even seventies.
The number of households renting privately has risen steeply in the last decade; in 2001 the figure stood at 2.1 million, by 2010 it was 3.4 million. Estimates suggest that around half of these tenants have ambitions to own their own homes but are stuck in the rental sector because they simply can’t afford to buy.
Although lenders have been slashing their home loan interest rates, in line with the Bank of England’s record low base rate (0.5%), they are still demanding high deposits – around 25% of the purchase price. Rental rates have never been so high and hard-pressed tenants are finding it difficult to raise these deposits, as landlords cash in on the extra demand for rental properties. Average rental rates in England and Wales have now reached an astronomical £718 per month.
Commenting on the subject, Miles Shipside, commercial director of property website Rightmove said: “Over half of those in rented accommodation would like to buy but can’t make the sums add up and, as a result, are trapped. The global economic woes that have left first-time buyer numbers at record lows will shatter the goals and aspirations of many as they face the reality of renting for far longer than they originally planned.”
One ray of sunlight in the housing market was the Bank of England’s mortgage approval figures for August; these reported 52,410 home loan approvals – the highest monthly figure since December 2009. However, despite the improvement, the market has a long way to go if it is to get back to the 90,000 monthly average that was the norm before the market crashed.