Research by the CML revealed high levels of student debt are becoming an increasing challenge for young people eager to step onto the housing ladder, and, in response, the Co-operative Bank, Nationwide and Bradford & Bingley have launched separate FTB products.
The CML report said rising house prices made catering for FTBs more of a challenge. It concluded lenders who offered flexible products that only allowed borrowers to take on serviceable, prudent levels of mortgage debt would be the best option for potential homeowners.
Commenting on the findings, Bob Pannell, head of research at the CML, said: “While home-ownership remains a long-term aspiration for the majority, the reality is that, for many young people, the combination of house prices and student debt is reinforcing a lifestyle choice in favour of renting.”
He confirmed the CML would be launching its Open Market Homebuy scheme in October, with mortgage lenders contributing to a shared equity loan.
However, a number of lenders have made moves to improve the number of FTBs in the market. The Co-operative Bank has teamed up with Places for People housing associations to allow residents to purchase all or part of their homes using a Co-operative Bank mortgage, through a shared ownership scheme, while Bradford & Bingley has launched a FTB professional mortgage range.
David Anderson, chief executive of the Co-operative Financial Services, said: “This partnership is great news for would-be homeowners and will help people take those first steps onto the property ladder.
“This scheme enables home ownership to be kept affordable by allowing residents to buy a partial share of their home, which can be added to at a later date.”
