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First time buyers bank on their parent’s help

First time buyers bank on their parent’s help

Category: Mortgages

Updated: 27/05/2011
First Published: 27/05/2011

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Hard up first time buyers are increasingly having to rely on their parents to get their foot onto the property ladder.

Four out of every five (84%) first time buyers are being forced to turn to their mum and dad for financial assistance, according to Clydesdale and Yorkshire Banks.

Incredibly, the figure has more than doubled since 2005, when just 38% of buyers relied on their parents to help buy their first property.

However, such are the difficulties currently facing those trying to fulfil their home ownership dreams, it is not just parental support that first time buyers rely on.

According to the survey, just under half (47%) of properties bought by first time buyers have been purchased with a joint income, either as a couple or with a friend.

Meanwhile, separate research by John Charcol suggests the market for first time buyers continues to show signs of improvement.

"There was again little change in the proportion of first time buyers last month but we are continuing to see the market for mortgages with loan to values between 80% and 90% improve," said Ray Boulger, senior technical manager at the broker.

"This will be welcomed not only by potential first time buyers but also by the many first time movers who bought their first home with a high loan to value mortgage shortly before the credit crunch, and in many cases have seen their property value fall, and are now mortgage prisoners."

HSBC and Yorkshire Building Society are amongst the lenders willing to lend to borrowers with just a 10% deposit, while Woolwich and first direct have mortgage deals open to those with a 15% deposit.

The broker also revealed that homeowners are increasingly turning away from fixed rate mortgages, choosing instead variable rate deals.

With expectations that rises in the base rate of interest are further away than originally thought, more borrowers appear comfortable taking out a tracker deal, or are happy to remain on their standard variable rate for longer.

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