First time buyers will continue to find getting a mortgage at a reasonable interest rate very difficult in 2011 as the mortgage freeze continues.
Net mortgage lending, which is the total amount lent by banks and building societies after subtracting the sum repaid by homeowners, is expected to fall to its lowest level in 30 years, the Council of Mortgage Lenders revealed.
Of the 2,500 different types of mortgage, only a quarter of those is available to those who are limited to a deposit of less than 25%.
Liberal Democrat Treasury spokesman, Lord Oakeshott said banks are abandoning millions of young people who have no hope of buying, no matter what their profession.
“There is only one bank left lending at fair rates to first-time buyers without a 25% deposit – the Bank of Mum and Dad,” he said.
“That is deeply divisive and damaging to social mobility.”
Predictions suggest that net mortgage lending will hit a low of only £6billion, a substantial drop since the peak year of 2006 when £110billion was distributed.
The amount has consistently dropped in the past three years; in 2008 – the year of the bail-out of the banks, the amount lent was £40billion, 2009 saw the figure drop to £12 billion, and this year the total is expected to be £9billion.
This November is revealed to have been the worst November economically for a decade, with gross mortgage lending, which is the total handed out, totalling only £11.1billion.
A massive drop from 2007′s peak gross lending total of £363billion, this years prediction is expected to be almost a third lower at £135billion.
As a result of the mortgage crisis, rents have risen to record highs as landlords take advantage of vulnerable tenants. Average rent has risen to a record amount of £692 per month, except for London where an astounding £992 per month is in demand.
With Britain’s average salary sitting at £25,000, the average rent in the capital is swallowing almost two-thirds of their take-home pay.