Homebuyers could get 6.5% times salary to offset rising house prices | Personal Finance | Finance
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Usually lenders offer to lend applicants four to four and a half times their salary – depending on their circumstances. However, this new mortgage deal from StrideUp will make it easier for some Britons to step onto the property ladder by enabling them to borrow more.
While the cost of living crisis and rising house prices have made it even more difficult for people to step onto the property ladder, there could be a glimmer of hope on the horizon for some.
Digital home finance group StrideUp is targeting the UK’s first-time buyer affordability crisis with a new mortgage plan offering up to six and a half times a purchaser’s income.
The move comes on the back of Industry data which shows rising house prices have outstripped incomes, meaning the average price to earnings ratio for first time buyers is 6.9 times their salary.
This is significantly above the financing attainable with a traditional mortgage pricing many out of the market.
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Sakeeb Zaman, co-founder of StrideUp said: “StrideUp’s mission is to build a more affordable and accessible way for first-time buyers to get on the housing ladder and that has never been more relevant.
“With surging house prices and constraints on traditional mortgage lending, deposits are often falling short, and at the same time people are spending more on rent and living costs.”
This could be a viable option for those who don’t want to rely on The Bank of Mum and Dad or those who are likely to enjoy pay increases as they age.
However it comes at the same time as new research reveals consumers’ confidence in the housing market has declined.
The number of people who think that now is a good time to buy a home has slumped to its lowest level (16 percent) since 2008 according to the BSA property tracker.
Almost two-fifths (39 percent) disagree that now is a good time to buy a property, an increase from 33 percent in March.
The main reasons given were the high level of house prices (73 percent), as well as the impact of rising interest rates (70 percent) and high inflation (70 percent).
In terms of barriers to homeownership, high house prices mean that raising a deposit required to buy a property remains the biggest one, with nearly two-thirds of respondents (62 percent) citing this.
Commenting on the findings, Paul Broadhead, head of mortgage and housing policy at BSA said: “Whilst it’s encouraging that less than one in ten homeowners are concerned about keeping up with their mortgage payments, this is likely to be because it will take time for Bank Rate rises to be felt by most borrowers, as around 80 percent are on fixed rates.
“Borrowers must however start planning for when their mortgage deal ends, as whilst the impact is likely to be quite modest, any increase in expenditure in the current environment will be unwelcome.
“Of greater concern is the growing number of people who are worried about paying their rent, which has doubled in the last 15 months.
“Whilst the support packages provided by the Government to date are obviously welcome interventions, it’s clear that for many, more support is needed if families are to survive the current crisis without increasing levels of personal debt.”
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