08/29/2024 | Press release | Distributed by Public on 08/29/2024 02:24
We're launching new support to get more first-time buyers onto the property ladder.
The housing market is looking pretty daunting to first-time buyers right now. A recent report found that the current climate of historically high house prices relative to incomes, elevated interest rates and affordability challenges have resulted in the most difficult conditions for first-time buyers in 70 years1.
In fact, since 2000 house prices have increased by 240%, while earnings have risen by just 112%2. This has caused some significant challenges when it comes to the loan to income ratio of prospective buyers who need a mortgage to buy a home, which currently sits at around 7 times the average income.
An average first-time buyer household income in 2024 is £73,0003, and it's estimated that 54% of prospective first-time buyers need a mortgage at or above 4.5 times their income (rising to almost 80% in London)4.
So, based on the average first-time buyer household income of £73,000, the current maximum amount that a customer could borrow, based on 4.5 times what they earn, is around £361,000.
"Are you two friends?"
"Yes."
"Yes."
"Would you consider buying a house together?"
"No."
"I don't think so, no."
"Would you buy a house with a mate? I'm Holly, from Lloyds Banking Group, and today we're out and about in London asking people questions, to see if they would buy a house with a friend or a sibling.
"Would you consider living together?"
"With this guy?"
"Yeah, yeah."
"Actually I think I would."
"Yeah, I suppose with Jack."
"Yeah, why not!"
"Would you consider buying a house with your siblings?"
"Yeah I would get one with my brother. I don't know, he's a bit more reliable."
"More reliable than me?"
"More reliable than you."
"Oh, no. No."
"No thank you."
"Ooooh."
"No."
"Did you know that half of young people nowadays would actually consider buying a house with their friend or their siblings? Why do you think that is?"
"Because everything's so expensive."
"What would make you not want to live with your friend or your sibling?"
"Personal space means a lot. You know, if someone's not washing the dishes. Wash the goddam dishes! Yeah it's just a lot."
"Hygiene would definitely be a key thing to think about. I'm a rugby player and I would imagine some of my mates are pretty grubby!."
Video | 1 min
Find out whether the people of London would buy a house with a friend of a sibling!
Becoming a homeowner is one of the most fundamental things someone can do to secure their long-term financial future, but it's not easy. To help make homeownership more attainable, we have a number of products and propositions across our brands to help give aspiring homeowners a step-up onto the property ladder, and in 2023 we lent £12 billion to first-time buyers.
Some of the first-time buyer solutions we offer include:
From 29 August, we're launching an exciting new proposition called First-time Buyer Boost. This enhances the loan to income multiple to 5.5 times for eligible first-time buyers who take out a mortgage with Halifax or Lloyds Bank with a loan-to-value of 90% or less5. Currently, the maximum amount we lend to these customers is 4.49 times their income. First-time Buyer Boost will enable us to lend eligible customers up to 22% more.
We're proud to continue to support the UK Government's Mortgage Guarantee Scheme, which means that first-time buyers can apply for a mortgage of up to 95% of the property's value. This makes it easier for first-time buyers to save for the deposit they need to purchase their first property, sooner.
The cost of buying a first home can really stack up, so to help out we have a number of cashback offers for first-time buyers under our Halifax brand. In April, we launched an initiative that gives first-time buyers up to £1000 cashback. There's also a Halifax first-time buyer £200 Cashback Primary Current Account Switcher offer. Running from 1June to 30 September, first-time buyers can get £200 cashback for choosing to switch their primary current account to us.
Our Family Boost mortgage allows the family members of first-time buyers to put 10% of the agreed property purchase price into a three-year fixed term savings account as security, instead of a deposit. The property still belongs to the buyer in the usual way, and family members get their savings back, plus interest, as long as payments are kept up to date.
We host free, online educational events with our first-time buyer experts to help prospective buyers understand everything they need to know about buying their first home. Attendees don't need to be Halifax customers, or even at the house hunting stage, to join.
While there has been real focus on how we can help people take their first steps on the ladder, there remains real opportunity for industry and government to continue to work together to provide even more support for first-time buyers, with Lloyds Banking Group committed to playing its part.
We are looking at the breadth of ways that first time buyers can choose to get onto the ladder. Whether this is taking out a mortgage with a friend or sibling rather than a romantic partner or spouse, or accessing schemes such as Shared Ownership. On the latter, while these products have been around since the 80s, they remain a relatively untapped resource for first time buyers for whom the ability to own a portion of a property that they can gradually increase over time until they own outright could be both an appealing and appropriate one.
We have also been reflecting on the potential of using rental payments to help assess mortgage affordability. This could mean that renters who have a long track record of paying rent on time would see this considered positively, while we would continue to protect our customers by only permitting them to borrow amounts that they could afford and which would remain manageable if rates were to change in the future.
Head of Halifax Intermediaries and Scottish Widows Bank, Lloyds Banking Group
Amanda joined Lloyds Banking Group 2 years ago as head of Halifax Intermediaries and Scottish Widows Bank. Nurturing relationships with mortgage brokers across the UK, the Halifax Intermediary team deliver over 85% of the banks mortgage business and help turn home ownership dreams into a reality.
Amanda has enjoyed a successful career in the mortgage industry that spans more than 26 years. Her career in the sector started as a mortgage broker and she has gone on to enjoy a variety of senior roles across 3 of the top 6 mortgage lenders. Amandas experience brings the insight to support mortgage brokers in delivering excellent customer outcomes, and the depth of knowledge to ensure the partnerships between lenders and brokers can continue to be meaningful and mutually beneficial.
Outside of work Amanda can occasionally be seen ruining a good walk by trying to play golf with her husband Fraser. Between them they have three sassy teenager daughters and the family favourite, their Maltipoo dog Bailey. Amanda is a self-confessed terrible cook but is very happy to sample others cooking.
19 August 2024 | Amanda Bryden
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