Mortgage chaos leaves first-time buyers ‘high and dry’, claims property expert

The fallout from Chancellor Kwasi Kwarteng’s mini-Budget, which has spooked the markets and caused the pound to fall to record lows, has also started to have an impact on the housing market.

While many were cheering or cautiously welcoming the stamp duty cut announcement on Friday, things took a turn for the worse yesterday when some mortgage lenders decided to withdraw certain products as the markets reacted badly to the measures set out in the Chancellor’s address.

And now a property expert has claimed that the ‘chaos’ surrounding the mortgage market will hit first-time buyers the hardest. 

“With last night’s news that mortgage products will be withdrawn for new customers, it is yet again first-time buyers who are being hit hardest by the UK’s economic woes,” Vadim Toader, CEO and founder of Proportunity, said. “The weakening of the pound and increasing interest rates has put lenders in a tough position, where it is not viable for them to offer the mortgage rate deals we were seeing only last week.”

He added: “This means, to access a decent rate, home buyers will need significantly higher deposits. However, it is unlikely that those saving to buy a house will see the recent interest rate increases passed on to their savings rates, making raising that larger deposit on their own, a longer and more arduous task. Quite the opposite, it will also most likely mean a further increase in rent prices (given landlords mortgages will also go up), which means saving will be that much harder.”

Toader says this couldn’t have come at a worse time, with Help to Buy applications set to end in just over a month (the scheme ends in April 2023).

“Many potential first-time buyers will see home ownership as an impossible dream,” Toader went on. “While the government has recently reduced stamp duty fees, in today’s market conditions, it only really benefits those already on the property ladder, leaving first-time buyers high and dry.”  

He said more needs to be done to help first-time buyers access the finance they need to start their home ownership journey.

“There is a lack of awareness about products such as mortgage booster loans, which offer a solid alternative for many buyers to help them unlock the funds needed for their ideal home,” Toader claimed.

“Brokers, fintech’s and lenders must work together to raise awareness of alternative financing options, so would-be homeowners are empowered to still realise their dream of home ownership, despite economic factors beyond their control.”