Large areas of England, Wales and the South will continue to be too expensive for single 30-somethings.


The government’s scheme to turn generation rent into generation buy will not help single thirtysomethings get on the property ladder in much of England and Wales, MBD analysis has found.

Monday’s mortgage guarantee program will allow banks and building societies to offer 95% loans. Buyers will only need to raise 5%.

The scheme, announced in March’s budget, aims to help first-time buyers and movers struggling to raise large deposits. Before the launch, some lenders offered 95% financing. Monday saw 38 additional mortgages be launched.

The nation is increasing the amount it will lend first-time buyers.
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However, the MBD analysis found that single buyers younger than 30 who are paid the UK median wage will not be able buy homes within half the areas of England and Wales.

Two incomes may make it easier to get a large loan, but people with the UK median earning will not be able afford to buy a house in London or any other part of the south or eastern.

The analysis considered only the most affordable type of property within each local authority. This was usually a flat, or a terrace home. The analysis also considered median prices and median earnings of borrowers over 30 years old. According to official statistics the average age of first-time home buyers is 32.

A graphic showing where single buyers on their own will be able to afford mortgages with the new scheme

Based on their earnings, mortgage lenders decide how much they will lend to buyers. Before they grant a loan, they conduct affordability checks.

Below is an analysis. Nationwide mortgage calculatorClick here to find out how much you could borrow based on your average earnings in England or Wales. Also, to determine if it would be enough to finance 95% property purchases in each area.

The study showed that while reducing the buyer’s down payment would be beneficial in some areas, it would not help enough in other areas to guarantee a home.

The analysis found a single woman on the UK median female wage for 30- to 39-year-olds – £30,258 – could not afford a 95% mortgage on a median-priced property in the cheapest band in more than half of local authorities in England and Wales.

Meanwhile, a single man on the median earnings for his demographic – £34,567 – could not afford a mortgage in almost half (48%) of local authorities nationwide.

For a mixed-sex couple, both aged 32, seeking to buy their first home, a median priced flat or terrace would be out of reach in 27 of London’s 33 boroughs, as well as parts of the east and south including Cambridge, St Albans and Epsom and Ewell.

Gay couples did better: They couldn’t afford to buy in any of the 10 local authorities across England and Wales.

It was one in seven local authorities for lesbian couple, leaving areas such as Brighton and Hove or South Hams out of reach.

London salaries are more expensive than anywhere else in the UK, and are expected to be higher than elsewhere. Even though a single woman would be in the top 20% of earners for her age, London would still price her out. Only one local council (Bexley) has priced her male counterpart out. A mixed couple on a combined wage of £94,022 would not be able to afford a mortage in 13 councils in the capital.

David Hollingworth, from the mortgage broker MBDamp;C, said high house prices and rents had made it hard for people to save a deposit, and the withdrawal of 95% mortgages when the pandemic hit had exacerbated the problem.

“The deposit will hold some first-time buyers back, so the return of 95% mortgages will help accelerate the homebuying journey for some. However, it is still intertwined with mortgage affordability and the borrowing amount that the individual can support,” he said.

“In many cases it will be necessary to keep growing a bigger deposit in order to bridge the gap between the maximum mortgage borrowing and the purchase price.”

Dan Wilson Craw, the deputy director of the campaign group Generation Rent, said the 95% mortgage scheme was only likely to be used by those who were already earning enough to save up a deposit “so the impact will be that relatively few people will be able to buy a home sooner than they otherwise would”.

He added: “For people who are already paying too much in rent, and struggling to put much aside, this scheme is unlikely to help. That’s particularly the case in London where many people are handing over more than half their income to their landlord.

“Instead of gimmicky mortgage schemes, the government should focus everything on bringing down rents.”

According to Defaqto 38 deals were launched. Half of these deals were fixed-rate mortgages with two-year terms. These were completely absent in the 95% market.

NatWest’s 2.9% rate for two-years is the lowest, and there is no charge. Santander will announce its deals Tuesday.

A spokesperson for the Ministry of Housing, Communities and Local Government said the scheme was part of a range of measures designed to help “many more people get the keys to their own home”.

The spokesperson said: “The new mortgage guarantee scheme will support more first-time buyers with smaller deposits to take their first step on to the housing ladder.”