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One in four first-time buyers refused a mortgage

Written by: Antonia Di Lorenzo
Buying a first home in Britain is still very difficult, despite steps taken by the government to make the process easier, research suggests.

A study from Aldermore suggested of those currently looking to buy their first home, almost 89% find it difficult, slightly down from August 2017 when the percentage was at 93%.

Raising a deposit is still the number one obstacle for four in 10 prospective first-time buyers, up from 34% in August last year. The number currently living with friends or family in order to save for a deposit has increased, from 23% in August 2017 to 27% in 2018, while a further third would consider it if it meant they could get on the property ladder quicker.

Concern about mortgage affordability has dropped since last year from 12% to 5%, but for one in 10 prospective first-time buyers, actually securing a mortgage is the biggest concern.

Account-holding banks saying no

One in four first-time buyers were refused a mortgage when they first applied through their main bank, with this most prevalent in London where nearly half experienced this.

Nearly half of first-time homeowners, or 48%, said they have had at least one property purchase fall through.

This is up significantly from August last year, when only 26% said they had lost a potential purchase, and is most common in London, with a percentage of 73%.

The average loss on fees and other home buying costs was £2,200 – this equates to a cumulative figure of £2.3bn for those who bought in the last three years.

It is unsurprising therefore that for nearly one in 10 first-time homeowners, the general uncertainty of the buying process was the hardest part, so much so that for 52%, the process made them ill.

However, there is a positive aspect, with almost eight in 10 saying that owning a home has made them more financially stable. For 81%, not having to waste money on rent is seen as a massive bonus. Also, most first-time homeowners feel confident they will be able to move up the ladder when the time comes, with a percentage of 81%.

Commercial director of mortgages at Aldermore, Charles McDowell, said: “It is apparent from our latest index that the house buying process leaves a lot to be desired. We have been encouraged by the government’s renewed focus on the issue of housing with the recent review into the house buying process, although it is too early yet to gauge real impact.

“We believe the real crux to fixing the broken housing market is to improve and increase housing stock. This is echoed by over a quarter of first time buyers who would like to see more building on the green belt. While the Chancellor announced some measures to build new homes in the Autumn Budget last year, given the government’s record on house building, it is necessary to make some serious progress. We need real action and results, not more consultations and whitepapers,” he added.

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