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Moving story

Premier Mortgage Service managing director John Malone says lenders must adapt products to meet the needs of first-time buyers and first-time sellers.

During the past 12 mon-ths, we have heard many predictions by economists and other experts on the way that property prices are likely to go. So far, many predictions have not materialised, creating further confusion for prospective buyers and sellers.

In the past three or four years, we have seen a sellers’ market, with prices fuelled because of lack of stock, high demand and a reduction in new build throughout the UK.

The sellers’ market is, however, coming to an end and most estate agents say vendors are being unrealistic about the price they expect to get for their property.

Buyers throughout the chain, from first-time buyers to upper-end (crunchy gravel) buyers, even with their property appreciation, are having affordability problems when trying to move up the property ladder.

The cost of moving is also affecting people’s decisions, with stamp duty on an aver- age property in the South- east 10,000 with a purchase price of 350,000. Then there are all the other expenses associated with a sale and purchase.

The uncertainty in the property market and a var-iety of economic factors affecting consumer confidence point to a potential buyers’ market.

This period between a buyers’ market and a sellers’ market provides the perfect opportunity to help those most affected by soaring house prices, that is, first-time buyers and, more important, first-time sellers. Estate clients have a massive part to play in assisting the food chain effect in the property market.

The difference in the price between a first-time seller and a second purchase has reached a point where key workers cannot move up the property ladder. Affordability, the cost of moving and employment uncer tainties are affecting homeowner decisions.

Identifying who the typical first-time sellers are is very difficult, bearing in mind homeowners’ complex life-styles. Taking everything into account, one could assume they are likely to be 30-35-year-olds with one to two children (or those would like to start or add to their family) and living in a flat or apartment. Their next move is to buy a semi-detached or mid-terraced house, with one of the main amenities being schools.

To a lender, these borrowers have a proven credit history and are used to the stresses and strains of meeting monthly commitments. A mortgage product such as Northern Rock’s Together product or Mortgage Express’s 130 range go a long way to helping these borrowers but could more be done?

Mainstream lenders Halifax, Abbey, Cheltenham & Gloucester and Nationwide understand and appreciate the problems experienced by many existing borrowers who fit into this category.

These borrowers are not the high-net-worth or the so-called professionals but the people who make up the vast majority of the UK workforce on average annual salaries of 20,000-30,000. Politicians, journalists and politically correct folk refer to them as key workers – the fabric of our society. Without them, the professionals and high-net- worth individuals could not carry out their functions or activities. Lenders are reviewing their thinking and product design to accommodate this group of existing borrowers.

Halifax, Abbey, Northern Rock, Cheltenham & Gloucester and Nationwide have been very receptive in their approach. They understand the concept and I am sure they will address the issue by creating specific products.

High loan to value lending is a must but the problem with some lenders is that loans of over 90 per cent can prove more expensive as most lenders use this as the starting point of the higher lending charge.

For some bizarre reason, borrowers who have to pay this insurance get charged on the borrowing over 75 per cent loan to value so someone trying to borrow 95 per cent of 200,000 would have to pay a hefty 3,000 or so.

One condition must be that the first-time seller must sell their property to put more properties into the first-time buyer market. We do not want them in a let-to-buy situation. We need more of these properties on the market. The lack of stock and the ever increasing competition from the buy-to-let brigade is having a damaging affect on our children’s property aspirations.

Property speculators and some BTL players are seriously affecting the property market. It is ironic, as I was involved with Mortgage Express managing director Tim Dawson in the creation of the let-to-buy concept in 1993/94 to kickstart the property market.

A moving property market is the bedrock for employment and not just for those involved in the transaction. The people we are trying to help are tradespeople of all descriptions and the key workers who provide the transport to get them to work.

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