First time buyer mortgages must adapt
There have been seismic changes in the UK economy and housing market during the last decade, however the available mortgage products for first time buyers have hardly changed from the time I was looking to purchase my first home.
First Time Buyers haven't suddenly become a greater risk to the banks in recent times but their needs have changed. The solution isn't to make loans unavailable or unaffordable for this group of buyers, but to adapt these products to today's reality,
Firstly we are all living longer and perhaps more importantly we are going to be working longer. Longer mortgage terms are needed to reflect this new reality 30 to 35 year mortgages are available but these need to become more available for first time buyers.
Flexibility. Mortgages need to be far more flexible with mortgages breaks available perhaps one month every year to help during the difficult Christmas period. Again such holiday breaks are available in some products, but need to be more widely available.
Rate security and flexibility. Variable rate mortgage products need to have the flexibility to switch to fixed rate products any time during the term of the mortgage without any penalty. Such mortgages are beginning to appear.
Overall banks need to alter their approach from an adversarial short term approach, hoodwinking buyers in straight jacket mortgages, confusing first time buyers with complex fees and rates which eventually cripple their finances, to a sensible look at the long term requirements of first time buyers and providing products that meet the needs of this group of buyers. Ultimately this will result in long term stability for the banks, lower risk of default, and therefore feedback in sensible rates for first time buyers.