A survey commissioned by Genworth Financial has found that a significant majority of MPs believe more must be done to help first time buyers. 83% stated that their constituents need more support, rising to 100% of those with constituencies in London.
Around 75% of those questioned by ComRes in January this year are told by constituents that it is impossible to get on the housing ladder, with those based in London disproportionately affected. This echoes the findings of Genworth’s ‘Barriers to Home Ownership Report’ issued towards the end of last year, which highlighted the ‘lost generation’ of homebuyers by quantifying that, every year since 2007 around 100,000 first time buyers have been excluded from accessing home ownership.
The current difficulties faced by first time buyers are clearly seen as a real concern for MPs, with 77% believing that home ownership - for those who can afford it - is an important policy goal. This feeling was particularly strong amongst Conservative MPs (92%). Interestingly, the sentiment was lowest among London MPs (67%), perhaps indicating that home ownership is so far out of reach for many in the capital that other solutions need to be examined instead.
Looking towards the wider impact that the housing market has on the economy, more than four in five (84%) of the MPs questioned agreed that a more fluid housing market, stimulated by easier access for first time buyers, would help the overall financial situation and social mobility of their constituents. To this end, 75% stated that people with a stable income, but without the savings to put up a deposit of 10-20%, should have access to mortgage finance provided repayments are affordable.
These results reflect the concerns shared at the ‘emergency summit’ on first time buyers chaired by housing minister Grant Shapps on 15th February with a number of solutions discussed by industry stakeholders including Genworth Financial.
Angel Mas, president of Mortgage Insurance for Genworth Financial in Europe, commented: “The deposit remains the biggest barrier to homeownership in the UK, along with the prudent approach taken by lenders, who are allocating their scarce capital to other segments of the mortgage market.
“The return of high loan-to-value lending is vital if we are to unlock the market for those with a sound credit profile, but who are unable to save for a deposit in the near term. Lenders can participate safely in the high LTV segment by transferring default risk to a specialist insurer. This model creates additional safeguards for the overall system as insurers will only accept this risk if appropriate lending criteria are applied and monitored.
“We welcome the renewed focus on first time buyers and call upon policymakers to create the right incentives, through reduced capital requirements for those lenders taking a prudent approach by mitigating their default risk with mortgage insurance.
“This framework already exists in a number of other major economies which have withstood the economic crisis, with the flow of credit to prime first time buyers remaining open through the cycle. The urgency of this situation should point towards their example rather than looking for new and untested solutions.”
