Three quarters (75%) of British first time buyers believe that banks must lend responsibly despite the fact it will stop some people getting a mortgage, while over half say that the high price of property is the single biggest barrier to getting on the property ladder, our survey for housing charity Shelter has shown.
- The survey found that 84% believe that banks should only offer mortgages to borrowers who can prove they can afford it
- 83% strongly agreed that lenders should check a borrower’s income before giving them a loan
- 75% believe banks should make sure borrowers have enough cash to pay the mortgage once other costs have been taken into account
- 53% of first time buyers agree the high cost of homes is the biggest barrier to them getting on the property ladder, compared to 41% who would say the biggest obstacle is availability of credit
- 28% said they had been offered a bigger mortgage than they had asked for, or knew someone that had
- The survey also reveals that 79% think banks and building societies lent irresponsibly before the credit crunch
- While 38% do not think they can be trusted to lend responsibly in the future
- And 65% of first time buyers think politicians need to be doing more to prevent irresponsible lending
Stronger mortgage regulation
Shelter is currently calling on the Financial Services Authority to implement reforms set out in the Mortgage Market Review and for the government to support stronger mortgage regulation.
Campbell Robb, chief executive of Shelter said: ‘This survey shows people really want simple, common sense rules in place to ensure people borrow money responsibly. What is most striking is the level of support amongst first time buyers who clearly want greater protection and are well aware it might limit their chances of getting mortgage credit in the future.
Robb is certain that these results are part of a set of ‘clear signals’ from economic experts and consumers ‘that mortgage lenders need to clean their act up’.
‘We are looking at some really tough times ahead as repossessions are already starting to rise and more and more people struggle under the combined pressures of VAT rises, increasing unemployment and sky high living costs. If we compound this by allowing irresponsible lending to make a return to the market, it will spell disaster for our fragile housing market and will undoubtedly result in many more people across the country needlessly losing their homes.’