Eddie Smith, director of operations for the AMPD, stated lenders had to be more innovative in their approach to FTBs in order to solve the ever-increasing problem they faced in getting a foot onto the property ladder.
He said: “We want to try and get lenders to push the boundaries out for FTBs. It’s so important in trying to move the sector forward and is a big project. I appreciate the issues that lenders have with credit risk and not wanting to overstretch borrowers, but this is still a major area we haven’t cracked, even with all the innovations there have been.”
Smith pointed to America for creative designs, such as mortgages that allow multiple occupiers and equity share products that go beyond what is currently available in the UK.
“I feel any movement on this problem is likely to come from new lenders, especially those from America. We have the foundations of products here, but we still need out-of-the-box thinking to move forward,” he said.
Ian Nelson, chief executive officer of Unity Home Loans, acknowledged the difficulty lenders faced, but did feel more could be done. He said: “One possible answer is for more funds to come from the government as incentives. But lenders do need to think of new ideas. The major high-street banks are what most FTBs approach and they’ve got a lot of business from them, but don’t really seem to be helping them.
“There are very few options out there. FTBs will always be a risk and mortgage lenders cannot put them at risk by simply putting up income multiples, as that would be a totally irresponsible way of lending. Splitting the risk, say between a parent and child, is a different matter.”
