Despite recent news that the government’s Funding for Lending Scheme – designed to help mortgage lending – is starting to get results, many would-be home owners are still finding it a challenge to get on to the property ladder >>
The Bank of England (BoE)’s latest credit conditions survey for the last quarter of 2012 showed that the number of lenders offering increased mortgage availability had risen 26%, the highest since the BoE began the survey in 2007. However, many first time buyers still face significant obstacles to home ownership. First time buyers still put down an average deposit of 20%, and those with small deposits find it tougher to secure a mortgage.
In addition, there is a large under supply of housing in the UK. Office of National Statistics figures show that there were 27.3 million households in the UK in 2011, which is expected to grow by 232,000 per annum until 2033, yet only 115,000 homes were built in
2010. This means competition for properties remains high.
In order to meet these challenges, Nationwide Building Society has recently launched a new initiative – Your Home, Your Money And Your Community – with a goal to boost the nation’s capabilities in housing, money management skills and communities.
The initiative aims to provide a practical set of measures to tackle the key issues that may stop aspiring home owners from getting on the ladder – lack of mortgage availability, barriers to saving a deposit and lack of affordable housing. It is hoped that this joined up approach from Nationwide will help 750,000 people into a home of their own by 2017!
Saving for a Deposit and the Future
The issue of personal debt is growing as the economic crisis continues and unemployment remains high. Research carried out by New Philanthropy Capital in 2011 on behalf of Nationwide, found that 28% of households in the UK have no savings at all, while 1.5 million people are unable to meet bills or credit commitments and another three million face a constant struggle to keep up.
Nationwide’s Your Home, Your Money And Your Community initiative plans to foster a savings culture through education as well as financial products, with a goal to get one million people saving by 2017. Alongside the production of financial guides, Nationwide has teamed up with National Numeracy, a charity created to develop and support numeracy skills throughout the country.
According to Nationwide research, 60% of its members have called for a particular focus on helping first time buyers so, in response, Nationwide has created an innovative scheme called Save To Buy.
The Save To Buy scheme consists of a dedicated savings account and a Save To Buy mortgage and could give first time buyers and home movers a much needed helping hand towards a home deposit or moving costs.
Helping to Make a Mortgage Affordable
The Save To Buy mortgage is linked to one of Nationwide’s Save To Buy savings accounts. First time buyers can apply for a 5% deposit mortgage when they have saved at least £50 per month in a Save To Buy savings account. Savers can also qualify for a lump sum cashback reward of up to £1,000 once the mortgage has been completed.
There is a huge shortfall between the number of homes being built in the UK and the demand for new homes. Nationwide, one of the major lenders to housing associations over the last 20 years, was also the first lender to commit over £9 billion to the affordable housing sector. In 2009, the Nationwide Foundation, an independent charity of which Nationwide is the main funder, provided £300,000 of funding to the Community Land Trust Fund. A community land trust is a non profit, community-based organisation that develops housing or other assets at permanently affordable levels for long-term community benefit. Nationwide’s investment in affordable housing stock can only be good news for first time buyers.
For more information on Nationwide’s Save To Buy scheme, its online First Time Buyers’ Guide and everything else it offers first time buyers, go to nationwide.co.uk.