Britain’s biggest mortgage lender has pledged £2billion to help First Time Buyers realise their home owning dream.
The Lloyds group, which includes the Halifax, will also allow young buyers to borrow up to 5.5 times their income which means they will need smaller deposits.
Rising house prices, the cost of living squeeze, high interest rates and affordability challenges mean conditions are the most difficult in 70 years for first time buyers.
According to some estimates, over half (54 percent) now need a loan of more than 4.5 times income. This rises to eight in ten in London.
Halifax said: “We are pleased to announce we have made £2 billion available for first time buyers (FTBs) who need to borrow at least 4.5 times their annual household income through our new proposition First Time Buyer Boost.
“We know that one of the main obstacles for FTBs is being able to borrow the amount needed to buy their home, First Time Buyer Boost will enable many FTBs to borrow more meaning we can help more people into homeownership.
“For new purchase applications from Thursday, August 29, the maximum Loan to Income is being increased to 5.5 times for many FTBs.”
The deals are available to buyers who have a total employed houseehold income of £50,000 or more and for loans at no more than 90 percent on the property value. As a result, the maximum loan available will rise from approximately £224,500 to around £275,000.
Toby Leek, president of estate agent body NAEA Propertymark, said: “It is encouraging to see banks offering help to first-time buyers at a time when many continue to struggle to take their first step onto the housing ladder.
“We now need to see more homes being built in order to keep up with rising demand as this will bring down prices in the long-term and make homeownership more affordable for all.”
Stephen Perkins, Managing Director at Yellow Brick Mortgages, told Newspage: “This is a very welcome change from the UK’s largest mortgage lender.
“Affordability has long been a limiting factor for many first time buyers, despite monthly payments being affordable.”
Riz Malik, Director at R3 Mortgages, said: “Halifax is leading the charge in getting first-time buyers onto the property ladder. The recent rate cuts and being more flexible on lending criteria, create the perfect environment to kick-start the UK’s housing market.”
Justin Moy, Managing Director at EHF Mortgages, said the scheme is similar to an offer from the Nationwide called “Helping Hands”.
He added: “It’s important lenders look at new ways to help homebuyers, especially where there is surplus income that can be used, and not putting borrowers at risk of default.”
Gabriel McKeown, Head of Macroeconomics at Sad Rabbit Investments commented: “The introduction of a new LTI limit of 5.5 times the annual household income, a significant increase from the previous 4.5 times, not only addresses the immediate needs of FTBs but also sets a precedent that could influence other lenders to follow suit.
“By increasing LTI, Halifax is addressing the immediate needs of FTBs and setting a precedent that could influence other lenders to follow suit.”
Rohit Kohli, Director at The Mortgage Stop commented: “This is fantastic news for first-time buyers and is the type of thing lenders should be looking to do with interest rates reducing in recent weeks. The biggest challenge remains the level of deposit required and at 90% loan-to-value they will still need a hefty deposit to secure this product.”
However, Craig Fish, Director at Lodestone Mortgages & Protection, warned: “With a minimum household income of £50k being required, it will alienate a few borrowers, so this is more likely aimed at two person households.”
