The chairman of a UK debt charity spoke out recently, claiming that mortgages to first-time buyers should only be agreed once they have had some training and passed a subsequent exam. Malcolm Hurlston from the CCCS has put forward the suggestion that mortgages should come with a buyer beware warning (caveat emptor), instead of the current tax break granted by the Stamp Duty Concession.

When addressing members of the housing credit industry last week Mr. Hurlston insisted that those least well off as well as those purchasing homes before they were ready to remained highly in danger of falling into a trap of “unmanageable debt,” in particular lower income families that already have difficulties with debt in most cases that then take on home ownership either too early or though ways that are "less than ideal". He referenced the Northern Rock situation as well, describing the situation in that particular debacle where a large number of 110~120% loan-to-value loans were in play as pure madness, going on to say that some sort of tuition should be looked into for people on low incomes considering a first-time mortgage.

Of particular interest was a reference he made to recent “pre-buying” federal education programs in the US. He insisted that first time mortgages would be better to not come with tax breaks “but with health warnings.” He compared them to driving licenses, stating that they should be packaged in much the same way when a person gets one after a period of study followed by an exam. He called on Financial Services Authority members to oversee all first-time mortgage buyers, with homeownership certificates to be introduced for those purchasing their first homes – and some feeling as well that it would be good even for home owners looking to get a re-mortgage should they have had problems in the past.

Sue Anderson from the Council of Mortgage Lenders agreed that, although there existed a coherent argument for arranging for much better education and guidance with regards to credit-related issues, the majority of people that encountered problems with mortgage repayments were generally affected by changes in their professional and personal circumstances such as sudden unemployment, which could not be mitigated by such training.

According to the most up-to-date research, the number of first-time home buyers in the UK has stayed at an almost twenty-year trough during the past year, and analysts suggest that the latest boost regarding stamp duty will be unlikely to help first-timers get their feet on the property ladder. The survey, conducted by Gfk’s Financial Research survey, indicated that 347,000 home-buyers took our mortgages for the first time for the annual period up to February, 2010. This figure is a slight increase on the figure of 331,374 recorded the previous year which was actually the first time that the figure had dipped below the 350,000 mark since the survey’s inception in 1993.

It is clear also that the number of first-time buyers has not raised significantly even in the wake of the stamp duty holiday incorporated over the course of last year on houses coting up to £175,000. The latest figures compares with a high point of over 700,000 in the yea 2004/05 and the yearly average figure of 561,000. It is also down 100,000 on the trough experienced during the period of the last recession back in the early 1990s, according to the research by Gfk.

They also added that the huge strain put on first-time buyers as a result of current deposit requirements would in al likelihood mean that recent measures taken by the government to offer stamp duty relief to all first-time buyers purchasing houses worth up to the value of £250,000 wouldn’t provide sufficient support despite the fact that mortgage rates are even hitting record lows in some cases.

As far as deposits are concerned, banks are currently insisting upon much higher deposits that in pre-credit crunch times, which has resulted in first-time buyers needing to amass savings of tens of thousands of pounds before they can even begin to think about buying a property.

When linked together with ever-rising house prices, the statistics from Gfk show that the average age of first-time buyers has risen from 31 in 1991 to 32 now. Gfk concluded that the lack of ability to raise a deposit was at the very root of the problem and was ‘locking younger people out’ of the housing market. The figures also showed that more and more over-50s were being granted first-time mortgages, and has lead to an increasing number of the baby-boomer generation buying up homes for their struggling children. Many are also buying for themselves as investments, helping to provide domestic competition in addition to a number of overseas investors also looking at the UK market. Gfk’s director, Ben Steer commented that “The current challenge for lenders is to create products that will assist young people without creating the kind of conditions that sparked the crisis in the first place.”

According to a survey recently commission by the National Housing Foundation nearly 22 percent of young individuals considering marriage in London are considering putting off marriage due to the current rise in house prices and their inability to afford homes. In fact, of all Londoners ages 18 to 30 roughly 6% feel that they will wait up to 20 years before being able to afford a home purchase and subsequently start a family.

Although the amount of good mortgage offerings has increased significantly in recent months due to various lender and government incentives to hopefully stimulate some additional market interest unfortunately this has not been enough to help secure new home owners a place to call their own. Even the new stamp duty break for first-time buyers purchasing new homes valued up to £250,000 is seen as a huge advantage for prospective purchasers throughout the country the average home price in London nears this for low-end properties far from downtown and in nearly all cases the purchase of a reasonable home would value much over this reasonable level.

Yet one more major concern for many purchasers is simply the cost associated with an initial down payment on the home. A standard 20% down payment on a home valued up to £300,000 could end up costing £60,000 and more if buyers wish to lock-in the best fixed rate mortgage possible. With an average annual pay in the city of £82,000 a year as of 2009 and various taxes and costs draining that substantially the amount of flexible remaining liquid funds is limited at best, and with investors looking to muscle-in on much of the market many prospective home owners may not find a window to make a reasonable down payment even for quite some time.

With the cost of house prices fluctuating rapidly in many areas and offering unpredictable results from an investment standpoint as well as the mortgage market changing with the economy and making the best mortgage rates unavailable to all buyers many people are beginning to try and push more towards renting a home rather than doing an outright purchase, especially for first-time buyers who are yet to commit to a home. Whilst this may be contradictory to what the government is currently trying to achieve by expanding the Stamp Duty since the holiday ended at the beginning of the year there are still many pros and cons to the argument.

Primarily one of the biggest concerns as well as supports of lending over buying is the issue of cost, wherein renting a home over a 25-year period rather than dealing with the mortgage sector may actually save potential home owners substantial sums of money. At the same time, however, the fact that individuals living in a home they do not own will not be able to benefit from any property appreciation on the location. Given that many homes tend to fall into disrepair over time without costly maintenance, however, this is an arguable support of purchasing in today’s market.

The issue has become particularly poignant in many commercial sectors, where favourable commercial mortgages are being offered to try and persuade buyers to help develop that sector that is currently facing some residual troubles from the economic recession. As many times a less-than-spectacular economic turn can lead to quick property losses on these types of properties potential buyers are turning more towards leasing rather than outright purchases, particularly in larger cities such as London where property prices are particularly high.

In any case the issue of whether or not to purchase or rent a home is something that must be decided upon before hitting the property markets as the benefits as well as drawbacks of each need to be considered before committing to an agreement that could potentially change your life in both the near and far future.

New plans detailed in the Chancellors’ recent budget to provide assistance for first-time buyers have been met with what has been described as a ‘cautious welcome’. The stamp duty on transactions of up to £250,000 is set to be suspended for people purchasing their first property for 2010 and 2011 in proposals announced by Alistair Darling. The proposals have attracted certain criticism from some industry bodies who argue that the plans should apply to all home-buyers as it might be somewhat hard to police.  The proposal will be funded by the planned raising of stamp duty to 5% on properties costing in excess of £1 million. Stamp duty levels currently stand at 4% of the total purchase price for houses costing in excess of £500,0000, and at 1% for properties costing between £125,000and £250,000. Properties that stand between these two brackets are charged at a stamp duty of 3%.

The CML have postulated that, rather than simply restrict the measure to only first-time buyers, it would have been far simpler to simply exempt all properties with a total value of less than £250,000. Along with the Council for Mortgage Lenders the CIT warned that the definition and subsequent proving of just who exactly is a valid first-time buyer potentially could well be very difficult, as there may well be complex cases that cause difficulties in practise and prevent otherwise valid purchases or even good mortgage offerings.

The Council for Mortgage Lenders went on to warn that it may be very difficult to verify just who is a genuine first-time buyer as compared to those who have previously owned property however no longer do so. In order to successfully qualify under the new measures buyers will need to be buying their first home where they are buying individually or jointly. If a couple are buying a home and one has previously owned a property the couple will not be adjudged as first-time buyers. They must not have previously owned property anywhere else in the world as well, having no overseas mortgages or outright purchases on record. Buyers must also be purchasing a location that will serve as their main or only home, and the completion date for the sale must be on or after 25th March, 2010 up to March 25th, 2012.

According to the latest research conducted by the Building Societies Association, confidence in the UK property market remains brittle as the country enters the final periods before the General Election, and buyers remain largely uncertain as to whether or not now is the best time to buy.

In general, it appears that people largely expect property prices will rise during the next year, although the current political uncertainties are giving rise to concerns that their buying power may be adversely affected. 

Some of the latest property surveys carried out by the BSA revealed that people are expecting property prices to increase by 2.2% during the coming year, although only 49% of those questioned believed that now is one of the best times to purchase a home. This figure is some way down on the 58% that responded positively as of December 2009 and it is the first occasion as well that the percentage of those questioned believing that now was a good time to buy has fallen below the 50% mark.

According to Paul Broadhead, Head of Mortgage Policy at the BSA, the figures are largely unsurprising. He believes that potential buyers will hold off in order to ascertain the effects of the ending of the stamp duty period on the property market. He also agreed that the upcoming budget as well as General Election give possible home-buyers “further levels of uncertainty.”

Mr Broadhead added, however, that people still appear to regard property as a decent investment, as they still expect property values should rise over the coming twelve months – particularly good for those seeking to get the best mortgage value possible. He hopes that buyers will return to the market following the election and confidence return with regards to the economic outlook.

Current research seems to suggest that 2010 could potentially be an strong year for many first-time buyers, with roughly 42% of all enquiries to registered mortgage advisers being from people looking to purchase their first property according to the latest reports from many property analyst groups. They believe that, all things considered, 2010 may easily turn out to be considered by many to be the "year of the first-time buyer" with even commercial mortgages getting a boost from the recovering economy, though naturally it is still too early in the year to determine whether or not this case will turn out to be true or not.

In  mortgage news, the Bank of England released its survey of the 3rd quarter credit conditions in the UK.

According to this report, the high street banks reduced the supply of mortgages and other credit to households during the third quarter, in contrast to the previous quarter which had seen more mortgage availability.

This shrinkage occurred despite te fact that  banks had promised to increase their lending. Bank representatives said they were unable to do this because of the deterioration in the cost and availability of funds.

Paul Samter, economist for the Council of Mortgage Lenders, was quoted in the report: “Lenders reported a welcome reduction in default rates on mortgages in the third quarter – the first in two years. Following our own figures showing a decline in mortgage possessions in the previous three months, there are encouraging signs that households are coping better than expected with difficult conditions. Despite this, however, we still expect payment problems to increase in the coming months, given the weak economy and jobs market.

“The survey also reported a small reduction in mortgage availability in the second quarter, mainly due to an unexpected deterioration in the cost and availability of funds for lenders themselves. More encouragingly, however, the survey found that lenders expect mortgage availability to improve modestly in the next three months.

“There have been recent signs of an improvement in wholesale funding market conditions, and the survey records a notable pick-up in lenders’ expectations that this will continue in the next three months.”

One day we report that the government has launched a new scheme aimed at helping distressed homeowners remain in their homes. The next day we report that studies and statistics show that the housing market is picking up. This can be very confusing. Dare you buy a home in today’s market, or not? Should you wait a few more months, just to make sure the recession is indeed easing? The key is to look at the lenders. Are they loaning money now? With excellent mortgage plans, especially for first time buyers? Then now may be the time to buy your new home. Even if you have bad credit, credit repair, sub prime and nonconforming lenders can help you now.

Before you undertake any financial transaction, but especially anyone so large as buying a home, you need to educate yourself about every aspect of what you’re doing. Your solicitor should be able to help you in this regard, but in addition, you need to compare mortgages offered by all lenders, to find the one best suited for you.

Moneysupermarket (a British price comparison website-based business specialising in financial services) reported that the number of consumers seeking mortgages to purchase a property now outweigh remortgagors. In addition, the number of people looking to remortgage their home fell as well. These figures would indicate that the public is now more confident that home prices have stabilised. With home prices so low now, they are convinced that they won’t fall any further, and are now willing to buy.

Numbers do not always tell the whole story, of course. The drop in remortgage searches may be because homeowners have learned that reverting to the SVR (standard variable rate) of their current mortgage is more cost effective in the short term. There are risks, of course. By not considering the cost implication of an increase in their SVR, they could get an unpleasant shock when rates increase, a shock that could be avoided if they remortgage now. Most, if not all, lenders’ websites and mortgage information sites have calculators that allow the consumer to input their various figures to find out if remortgaging will save them money over the long run. Take advantage of these tools, and of the current climate, if you possibly can, to find the best mortgage rates for you.

In the current mortgage crisis, many borrowers are losing their homes for a variety of reasons. One of these is that they ignore their payment problems, and do not talk to their mortgage lender until it is too late to do anything to help them. There are many reasons for this – many people do not like to meet trouble head on, and hope that if they will ignore it it will go away or solve itself. When it comes to their mortgage, that rarely happens. In an effort to educate the populace about this, and other problems, the government has launched a new Information Scheme, which will help borrowers learn to take control of their repayment problems, most of all by discussing these problems with their lender as soon as possible.

According to Council of Mortgage Lenders (CML) director general Michael Coogan, most customers who are "committed to solving their problems and working with their lender" can successfully solve those issues. The information scheme consists of a series of advertisements – in newspapers, online and on billboards – to alert borrowers to the schemes the Government has put in place to help them to prevent repossession.

Here’s the external link: http://mortgagehelp.direct.gov.uk/

There’s also a scheme to help at risk individuals keep their homes, if they qualify.

Here are the criteria from the direct.gov website:
o be eligible for the scheme your household must include someone in ‘priority need’.
This could be:
* a pregnant woman
* someone with dependent children
* someone who is vulnerable because of old age or a physical or mental impairment

You’ll also need to meet the following criteria:
* your household earns less than £60,000 a year
* you don’t own a second home, including a home abroad
* the value of your mortgage (and any loans taken out against your home) is less than 120 per cent of the value of your home
* the value of your home isn’t higher than certain levels set for each region – ask your council about the level for your area

When you apply for the scheme, your local housing authority will talk you through some other criteria that you’ll need to meet.