UK Families Lose £64.58 Daily Due to Mortgage Lender 10% Deposits
According to the Nationwide Building Society, last year house prices dropped by an average of 15.9%. In their press release December 2007 the average UK house price was £182,080 and in December 2008 they reported the average at £158,442. Leaving the average UK homeowner, a massive £23,638 worse off, than they were at the beginning of the year.
Here at Needing Advice we blame it on the banks being over cautious with lending criteria for first time buyers. Unfortunately lenders now require a minimum of a 10% deposit to get on the property ladder. Understandably banks need a cushion in case the borrower defaults and house prices have dropped. But because the banks need such a high deposit they are actually fuelling the house price property crash.
Unfortunately this causes a vicious circle, first time buyers cannot get on the property ladder, so 2nd and 3rd time home buyers cannot sell their homes. This causes market demand to drop and thus house prices to lower.
Until the banks and building societies ease lending criteria and allow first time buyers to get on the ladder we predict that house prices will continue to drop in 2009. Being at the forefront of the lending process over the last 4 months I personally have seen 7 people with 5% deposits ready and looking to put offers on smaller cheaper properties. These people have all had excellent credit ratings and would normally been accepted for mortgages. However due to lenders requiring 10% deposits they had to put their plans on hold.
I am not suggesting that lenders take on risky mortgages. However for those with good credit histories and previous credit that has been paid well then a 95% mortgage with a 5% deposit should be offered. Once the number of first time buyers increases then property prices will begin to stabilise.
Figures from http://www.nationwide.co.uk/hpi/
