Buying your first home was once a milestone that most people could reasonably expect to achieve in their 20s, but now the average age of a first time home buyer in England is 34 years old. This reflects ever-rising property prices, a shortage of quality affordable homes, and a high barrier of entry into the mortgage market.
At the same time, rents and other living expenses have increased sharply over the last few years, making it even harder for young people to save for a deposit. This is creating a more unequal and divided society, and causing young adults to delay other milestones, such as getting married or starting a family.
Government Launches New Mortgage Guarantee Scheme
However, the government is keen to address the situation, and part of their response has been to launch a new permanent mortgage guarantee scheme. The Negotiator reports that the government is also backing a new proposal from the Financial Conduct Authority (FCA) to relax the application criteria for mortgages.
Emma Reynolds, Treasury Minister, said: “For too long politicians have ducked and dodged the decisions needed to support homeownership. Simplifying responsible lending rules and putting in place a permanent mortgage guarantee scheme shows our commitment to making the dream of owning a home a reality.”
Housing Minister Matthew Pennycook added: “The affordability challenges facing first-time buyers mean that we now have a generation locked out of homeownership. This government is determined to change that, ensuring that young families and hardworking renters can buy a home of their own.”
Further details of the new permanent mortgage guarantee scheme will be announced in due course. It is aimed at replacing the existing scheme that will expire later this year, and will provide banks and building societies with the confidence to offer more low-deposit mortgages.
This will enable more young people to take the first step towards home ownership. The government has also committed to delivering 1.5 million more new homes during the next five years. Measures have been put in place to reduce the red tape around planning permission and free up the availability of brownfield sites to developers.
Modernising the home buying process
To further improve user experience of the property market, the government has announced major plans to modernise the way that homes are bought and sold. The improvements will use digital technologies to streamline the transaction process, reducing the number of fall-throughs and delays.
Ultimately, the government hopes to emulate other European countries such as Norway, where a fully joined up and digitised buying and selling system has reduced average transaction times to just one month.
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