Young people choosing to rent rather than buy
Nearly two-thirds of 20 to 45 year-olds don't believe they have any chance of getting onto the property ladder, according to research out today.
A survey from Halifax and the National Centre for Social Research reveals that while 77% of all non-homeowners would like to buy their own home, young people are increasingly turning their backs on the housing market and choosing to keep renting instead.
A shift in attitude has created a new generation of renters unwilling to save up huge deposits.
One survey respondent, a London renter, says: "I'm not interested in trying to stop my life now when I'm 31 to not go out and not do anything to save up for the £40,000 deposit. I'd rather live my life now."
Another respondent, renting in Manchester, also argues that sky-high deposits give no incentive to save: "Say you were 22 and you go 'right I'm going to save for a deposit, how much do I need? Oh, I need £15,000'. It's not realistic. If it was a realistic target you'd be more motivated to reach it."
On top of the difficulty of saving enough money, 84% of young people believe banks will turn them down for a mortgage and 61% don't want to go through the stress of a mortgage application.
David Hollingworth, spokesperson for mortgage broker London & Country, says: "In a market where consumer confidence remains weak it is perhaps not surprising to see that many potential first-time buyers feel their route to home ownership only gets harder.
"In the current market there remains a need for a bigger deposit and lenders have tightened their criteria, making it harder to qualify, especially when borrowing a high proportion of the property value."
In response to the survey's findings, Halifax will launch its First-Time Buyer Pledge. Stephen Noakes, commercial director of Halifax Mortgages, says the pledge will "dispel any myths about the mortgage process".
He promises that Halifax will publish a more detailed overview of its lending criteria and provide more information on why an application has been turned down. Applicants can also get a "personalised promise" on how much Halifax will lend them without any record left on their credit file.
Hollingworth welcomes Halifax's pledge to provide first-time buyers with more information, although he asks for more concrete measures to be introduced too:
"Providers really need to show their commitment in terms of better deals and straightforward criteria for those with smaller deposits."
If you're thinking about buying your first home and don't know where to start, take a look at Nationwide's user-friendly first-time buyers guide.