I had the pleasure of a two-hour call with my bank earlier this month in which they explained to me I’d booked an appointment five hours too late to qualify for a 90% mortgage.
That was nice.
It’s not their fault, I suppose. None of the banks are taking 10% deposits anymore, unless of course you can move quickly enough for a one-day mortgage ‘fire sale’ or jump through some pretty wacky hoops.
“Ooooh, sorry, your mum and dad can’t help you on the deposit! No flats I’m afraid, only detached period properties in the home counties. Oh dear, you’ve not got 750 months’ payslips here, and you can’t prove you’ve done meat-free Mondays for 12 consecutive Mondays? It’s really not looking good,” they wince smugly, tallying your insufficiency against the latest set of arbitrary criteria.
But alas, Britain’s big banks have been inundated over the summer, as the older, wealthier contingent cash in on the stamp duty holiday. At the same time, banks are anticipating a bumpy road ahead, and so have been pulling their riskiest products as a safeguarding mechanism. As one bank withdraws, so do two more, and so on.
Lloyds, Barclays, Santander and HSBC have all axed loans for borrowers with a deposit of 10% or less. According to The Sunday Times, it is the first time since records began that this has happened.
Cut to me, up to my elbow in sofa, trying to sort the pennies from the crumbs for a 15% deposit – or the best part of £50,000 in London. That’s an impossibly huge sum of money.
This is the reality for first-time buyers for the considerable future. Even if the elusive 90% mortgages return, the interest rates are likely to be untenable. And I’m sure that won’t stop some young people being forced into expensive, long-term fixed rate mortgages because there is simply no viable alternative (rent in London being around £1,400 for your average one bed).
Meanwhile, the housing market is booming. Last month, house prices were 3.7% higher than a year earlier, according to Nationwide building society. But, crucially, beneath this headline lies a rift: young and less well-off people are being shut out.
While this might seem like a non-issue to the upper echelons at the moment, it will certainly come to haunt that renovated farmhouse in Buckinghamshire or holiday cottage in the Highlands in the long run.
Because, without us chain-freers fuelling the fire at the bottom of the heap, and without the stamp duty free-for-all, this mini boom will surely bust, and soon.