Money Insider: Bank of mum and dad vital to first-time buyers

 

Two separate reports published this week have highlighted the level of financial assistance family members have provided to help their nearest and dearest take their first step on the property ladder.

The situation for first time buyers has been extremely difficult since the banking crisis first took hold over four years ago, but it has gradually started to get a little easier.

Back in 2008 and for much of 2009 it was nigh on impossible to find a mortgage unless you had at least a 25 per cent stake to put down, which was simply not achievable for most would-be borrowers.Even if you somehow managed to overcome the high deposit requirement, the interest rates and product fees at the time made the deal too expensive.

The situation today is much improved with many lenders now offering more affordable 90 per cent loan-to-value deals and one or two even prepared to consider borrowers with just a 5 per cent deposit.

Many people have probably forgotten just how expensive mortgages were for new buyers four years ago when compared with today.

For example a two-year fixed rate in September 2008 for a 90 per cent LTV mortgage from C&G was 6.25 per cent plus a £1,000 fee, whereas today Yorkshire Building Society is offering 4.95 per cent and £495 fee for a 90 per cent two-year fix.

Similarly an 85 per cent LTV three- year fix would have cost you 6.39 per cent and a 1 per cent product fee from Principality Building Society four years ago, but today First Direct is offering a 90 per cent LTV rate of just 4.89 per cent and no fee. The difference in cost is staggering with the First Direct mortgage (25 years) cheaper by £5,095 over the three-year fix period compared with the best deal available in September 2008.

It's no surprise therefore that research released today reveals that in the last five years 100,000 first time buyers (FTB) have turned to the bank of mum and dad to help them get a mortgage for a home of their own.

The value of family-assisted FTB purchases in this period totalled £23bn – or £5.6bn a year. Without help, the report estimates, in the last 12 months alone, 20 per cent of FTB property purchases would not have taken place.

The report, carried out for HSBC by the Centre for Economics and Business Research, was backed up by a separate piece of research published this week by Saga, which states that one in eight over-50s already give their children or grandchildren money for a deposit to buy their first home.

It reveals that 10 per cent give young family members between £5,000 and £20,000 while a further 7 per cent give more than £20,000.

There may be less reliance on family finance as a source of funding than in 2008 but for those who don't want to rent and line the pockets of a landlord, it may be their only route to home ownership.

Andrew Hagger is an independent personal finance analyst from

www.moneycomms.co.uk

Lenders offer lower rates – some with no fees attached

There was more good news for mortgage borrowers this week as the battle for best-buy supremacy continues to drive down rates.

If you've got at least 35 per cent equity in your home and you're looking to remortgage, Clydesdale and Yorkshire Bank is now offering a two-year fixed rate of 2.99 per cent and has temporarily scrapped the usual £999 arrangement fee.

With some lenders already announcing increases to their standard variable rates, there are likely to be many borrowers considering their next move, but if you like the sound of this 2.99 per cent deal, you'll need to act quickly as it's only available until 11 November.

If you're looking to fix your repayments for longer than two years, you can currently get 2.74 per cent with a £1,499 fee for a three-year fix to 65 per cent LTV with First Direct.

For five years take a look at Post Office where at the moment you can lock in at 3.59 per cent to 75 per cent LTV with no product fee.

Independent Partners; Do you need financial advice on your investments, pension or insurance? Book a free consultation with an independent Financial Adviser at VouchedFor.co.uk

Arts and Entertainment
Buttoned up: Ryan Reynolds with Helen Mirren in ‘Woman in Gold’
filmFor every box-office smash in his Hollywood career, there's always been a misconceived let-down. Now he says it's time for a reboot
News
people
News
Actress Julianne Moore wins the Best Actress in a Leading Role Award for 'Still Alice' during the 87th Annual Academy Awards in Hollywood, California
people
Sport
Ross Barkley
footballPaul Scholes says it's time for the Everton playmaker to step up and seize the England No 10 shirt
News
'We will fix it': mice in the 1970s children’s programme Bagpuss
science
Life and Style
2 Karl Lagerfeld and Choupette
fashion
Finacial products from our partners
Property search
  • Get to the point
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

ES Rentals

    iJobs Job Widget
    iJobs Money & Business

    SThree: Graduate Recruitment Resourcer

    £20000 per annum + commission: SThree: Sthree have an exciting opportunity for...

    Recruitment Genius: Telesales Executive - OTE £32,000+

    £18000 - £32000 per annum: Recruitment Genius: A Telesales Executive is requir...

    Ashdown Group: Marketing Manager - B2B, Corporate - City, London

    £45000 - £50000 per annum + benefits : Ashdown Group: A highly successful, glo...

    Neil Pavier: Commercial Analyst

    £50,000 - £55,000: Neil Pavier: Are you a professionally qualified commercial ...

    Day In a Page

    War with Isis: Iraq declares victory in the battle for Tikrit - but militants make make ominous advances in neighbouring Syria's capital

    War with Isis

    Iraq declares victory in the battle for Tikrit - but militants make make ominous advances in neighbouring Syria
    Scientists develop mechanical spring-loaded leg brace to improve walking

    A spring in your step?

    Scientists develop mechanical leg brace to help take a load off
    Peter Ackroyd on Alfred Hitchcock: How London shaped the director's art and obsessions

    Peter Ackroyd on Alfred Hitchcock

    Ackroyd has devoted his literary career to chronicling the capital and its characters. He tells John Walsh why he chose the master of suspense as his latest subject
    Ryan Reynolds interview: The actor is branching out with Nazi art-theft drama Woman in Gold

    Ryan Reynolds branches out in Woman in Gold

    For every box-office smash in Ryan Reynolds' Hollywood career, there's always been a misconceived let-down. It's time for a rethink and a reboot, the actor tells James Mottram
    Why Robin Williams safeguarded himself against a morbid trend in advertising

    Stars safeguard against morbid advertising

    As film-makers and advertisers make increasing posthumous use of celebrities' images, some stars are finding new ways of ensuring that they rest in peace
    The UK horticulture industry is facing a skills crisis - but Great Dixter aims to change all that

    UK horticulture industry facing skills crisis

    Great Dixter manor house in East Sussex is encouraging people to work in the industry by offering three scholarships a year to students, as well as generous placements
    Hack Circus aims to turn the rule-abiding approach of TED talks on its head

    Hack Circus: Technology, art and learning

    Hack Circus aims to turn the rule-abiding approach of TED talks on its head. Rhodri Marsden meets mistress of ceremonies Leila Johnston
    Sevenoaks is split over much-delayed decision on controversial grammar school annexe

    Sevenoaks split over grammar school annexe

    If Weald of Kent Grammar School is given the go-ahead for an annexe in leafy Sevenoaks, it will be the first selective state school to open in 50 years
    10 best compact cameras

    A look through the lens: 10 best compact cameras

    If your smartphone won’t quite cut it, it’s time to invest in a new portable gadget
    Paul Scholes column: Ross Barkley played well against Italy but he must build on that. His time to step up and seize that England No 10 shirt is now

    Paul Scholes column

    Ross Barkley played well against Italy but he must build on that. His time to step up and seize that England No 10 shirt is now
    Why Michael Carrick is still proving an enigma for England

    Why Carrick is still proving an enigma for England

    Manchester United's talented midfielder has played international football for almost 14 years yet, frustratingly, has won only 32 caps, says Sam Wallace
    Tracey Neville: The netball coach who is just as busy as her brothers, Gary and Phil

    Tracey Neville is just as busy as her brothers, Gary and Phil

    The former player on how she is finding time to coach both Manchester Thunder in the Superleague and England in this year's World Cup
    General Election 2015: The masterminds behind the scenes

    The masterminds behind the election

    How do you get your party leader to embrace a message and then stick to it? By employing these people
    Machine Gun America: The amusement park where teenagers go to shoot a huge range of automatic weapons

    Machine Gun America

    The amusement park where teenagers go to shoot a huge range of automatic weapons
    The ethics of pet food: Why are we are so selective in how we show animals our love?

    The ethics of pet food

    Why are we are so selective in how we show animals our love?