First-rung now, fifty, or never....?

    /24-7PressRelease/ - LONDON, UK, July 03, 2006 - The latest data from the Alliance and Leicester deserves more debate and attention than it will receive in the mainstream press and media in a weekend which will surely be dominated by World Cup news. Not least because it is quite a radical departure from the typically anodyne 'messages' A&L appear to push with monotonous regularity.

Generally the Firstrung team sift through A&L data in an attempt to unravel the message so carefully designed by an army of sophists in order to provide the 'feel good' factor. If that data is timed for release over the weekend, public relations companies can demonstrate even greater success for their clients.

It is therefore with some surprise that A&L saw fit to publish data suggesting that all was not well in the world of property ownership, particularly in the over 50's age group where (it now appears mistakenly) most below this age, and particularly those struggling to climb onto the fabled first-rung, imagine there would be no evidence of financial hardship, or lack of opportunity.

The image most would have of the over 50's in the U.K. is one of; the majority owning their own property and having bought in the late 70's - early 80's, have enjoyed significant wage inflation, this would have neatly combined with overall inflation resulting in the eradication of their mortgage debt. The conventional mortgage was created in the early seventies to reach the masses, how could so many have not taken advantage?

Today we learn that, according to A&L, a staggering 41% of over 50's cannot afford to buy their own property, even for a company such as Firstrung, that has access to most up to date available data and the ability to disseminate it, this came as quite a shock. Whilst we realised our proposition needed to expand (given the average age of an FTB is now 34) beyond simple instructions on; how to negotiate with estate-agents and what 'gazumping' meant, we could not imagine creating relationships with SAGA or 50connect in order to offer advice to struggling first time buyers.

Lenders encouraging guarantor and parent assistance mortgages should be equally concerned as to the scope of their offerings. Propositions aimed at parents giving financial aid to their children are surely now rendered equally pointless.

There is however another issue, just as serious, not covered in the data from A&L; how does an 'over 50' obtain a mortgage given the necessary insurance covenants required?

The short answer is they can't, a 55 year old (in broad terms) will only be offered a 15 year repayment mortgage with a 20% deposit, the insurance premiums will also be sky high. Looking at this age group in isolation it appears as equally hopeless as it does for those at 34 and below, (the average age of an FTB)

Unless new more exotic loan products reach our shores, such as the disastrous 'inter-generation mortgages' created in Japan in the late 80's, then it looks increasingly likely that a huge swathe of the UK population will be denied the opportunity of home ownership. Of equal concern should be the realisation that competition to purchase property appears to have straddled generations, most first time buyers could not have imagined a scenario where they had to compete with their uncles to climb onto the first-rung.....

About Firstrung

Firstrung is the market leading advice centre for first time buyers, for further information please contact [email protected]

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