Boris Johnson’s plans to help ‘Generation Rent’ become homeowners have been welcomed by the Cumberland Building Society which says it has seen a surge in first time buyers attracted by its mortgages that require only 10 per cent deposits.
The Prime Minister promised action this week to help young people get on the property ladder by ensuring they had access to low deposit mortgages, adding that he wanted to help create two million new homeowners.
The Cumberland is one of the few banks and building societies that currently requires a deposit of 10 per cent for mortgages in its operating area, with many providers demanding 15% or 20% deposits at least.
The property market took a huge hit when coronavirus began to spiral out of control earlier this year, but has bounced back since the lockdown was eased in July and the Government announced a stamp duty holiday.
The Cumberland says mortgage enquiries from people buying their first home during September were up 30 per cent on last year, continuing the trend it has seen over the last three months.
Lewis Benson, area manager at The Cumberland, says first time buyers have been key to reinvigorating the housing market in Cumbria.
“Boris is right that first time buyers need low deposits and we’ve been fortunate as a business to be able to provide people with 90 per cent mortgages which means they only needed a 10 per cent deposit.
“In some Cumbrian towns, particularly in the west and north of the county, £100,000 will buy you a really decent property so a £10,000 deposit does feel like something that is achievable to a lot more people – particularly if they get help from parents or grandparents,” he said.
While many people’s incomes have been badly hit by furloughs and redundancies there have also been a lot of people who have been able to make significant savings because holidays and going out had not been an option, he added.
“If you’re 25 sometimes someone saying you need to go away and save towards a deposit can be quite a challenge if your friendship group are maybe going off on holiday or heading to festivals. We’ve seen a number of first time buyers who have really used the lockdown as an opportunity to knuckle down and save.”
The buoyant housing market has led to complaints from some first time-buyers that they have been forced to wait weeks for mortgage appointments, but the Cumberland has been able to maintain a quick turnaround through its local teams.
Mr Benson said: “We’ve had a number of first time buyers coming to us because they have been told elsewhere that they will have to wait up to six weeks which is a long time when the market is moving fast.
“We’ve also had a lot of homeowners starting to feel like they want to move quickly to take advantage of the stamp duty holiday which is due to end in March. The 90 per cent mortgage works in their favour too if they are looking to move to a higher value property.
“So it’s important that we can arrange appointments quickly and make sure it’s with somebody who can guide them through the whole process rather than just hand them a form. Properties are going quickly and we are still finding that sellers might prefer first time buyers as they are not in a chain. They are seen as less of a risk and if they have a mortgage secured can often move very quickly.”