According to the Intermediary Mortgage Lenders Association, 58 per cent of first-time buyers were unable to get a mortgage through their broker in the final three months of 2008 according to IMLA’s latest intermediary survey.
It found that 56 per cent of brokers surveyed said the reason they couldn’t find a mortgage for a first-time buyer was that the most suitable product wasn’t available via intermediaries. Of those who were unable to obtain mortgage finance through their broker, eight out of ten opted to rent instead.
IMLA executive director Peter Williams says: “The first-time buyer end of the market has been hit extremely hard by lenders tightening their LTVs. For youngsters without a substantial deposit, the only alternative is renting. The private rented sector is going to have to pick up the slack.”
But IMLA is concerned that the buy-to-let mortgage market is also contracting rapidly. It says the private rented sector will not be able to grow and support increased demand for rented property if private investors cannot get mortgage finance.
Williams adds: “If we are to see a genuine contraction in homeownership in the UK, the government must put its money where its mouth is. They must promote non-banks to the bank bail-out premiership. Currently, intermediary lenders who traditionally serve the buy-to-let market are being frozen out by the government – without support helping them to free up cash to lend, the buy-to-let market will suffer further retrenchment.
“This is a vital component of the UK housing market and the government are currently ignoring its need.”