The UK is seeing the rise of a new kind of home owner, including flexible workers, freelancers, entrepreneurs and those on parental leave.
But despite being ready to take their first step onto the property market, this new normal home owner is being let down by the mortgage market, according to a new report out today by Online Mortgage Advisor of 2,000 consumers in this position.
Nearly one in ten (9%) couldn’t find a mortgage at all. This rose to 16% of freelancers, 20% of those on maternity or paternity leave and 28% of people on zero hours contracts, even though the majority have a good credit history.
One in ten have missed out on the house they wanted as a result of lenders’ criteria. Overall, 38% of new normal homeowners have considered delaying their home purchase until their circumstances change. The average delay is 2.1 years, although 13% have considered waiting for over five years.
“New normal homeowners don’t fit the mould of traditional mortgage lenders. For example, freelancers often earn the same, or more, than full-time employees, but their income can vary from month to month – and mortgage lenders often want two or three years of accounts. Circumstances that were unusual for first time buyers 30 years ago are now much more common. But many lenders haven’t kept pace with the rise of new normal homeowners, offering harsher lending criteria or just turning them down – with very real, personal consequences.” – Pete Mugleston, Managing Director at Online Mortgage Advisor
A third (34%) of new normal home owners feel at a disadvantage compared to “traditional” first time buyers and nearly half (43%) feel that lenders don’t reflect contemporary society. A quarter (25%) conclude that mortgage brokers simply aren’t equipped to deal with people in their circumstances.
Importantly, the majority of these buyers are unaware of the specialist support tailored to their circumstances. Only one in ten (12%) have spoken to a specialist mortgage broker, while over three quarters (78%) are unaware that these specialist brokers exist at all.
The average new normal home owner plans to spend or has spent £174,377 on their first home. By failing to serve their needs, the housing market could be missing a significant opportunity, especially during the current period of low growth.
“It’s vital that prospective home owners are able to turn to the specialist mortgage providers that understand their circumstances and can share the advice that will set them up for the future. With more choice, new normal home buyers can join the property market, and not only get the house of their dreams but give the UK housing market a much-needed boost in the process. It’s time for the mortgage market to catch up with the new normal home owner.” – Pete Mugleston