Difficulty accessing mortgage funding remains the biggest block to first-time home ownership according to a new survey, which has found that as many as 80 per cent of potential first time buyers (FTBs) are being forced to rent because they can’t get the funds to buy.
The research, conducted from a sample of 1,000 adults on behalf of Genworth Financial, also found that FTBs are placing a continuing reliance on their parents to help fund new home purchases.
Some 71 per cent of respondents believe FTBs are turning to their parents for financial help when purchasing a new home, while a further 65 per cent see saving for a deposit as the main barrier to home ownership. Of those who currently do not have a mortgage, 61 per cent said it would be at least three years before they plan on taking out their first mortgage.
Given the difficulties, 70 per cent of those polled believe that the Government should do more to help FTBs get onto the property ladder while a greater number (80%) also want new measures to be introduced to avoid a return to the bad lending practices seen during the boom years.
Angel Mas, president and CEO, Mortgage Insurance Europe, said a new approach is required, such as the introduction of mortgage insurance.
“The advantage of introducing a universal mortgage insurance scheme targeted at first time buyers would facilitate banks to safely lend to those with a smaller deposit on a more prudential and sustainable basis,” he said.
Mortgage insurance is available in many countries but is currently used extensively in Australia, Canada, France, Hong Kong, Netherlands and the United States. It is an insurance product banks and building societies take out to protect themselves for any losses suffered as a result of a borrower defaulting on their mortgage and being unable to repay the outstanding debt with the proceeds of the sale of the property.
Economist Jim Power added that his research shows that universal mortgage insurance has the potential to facilitate first time buyers gaining access to mortgage finance and can do so in a way that is sustainable and responsible.
