Without parental assistance, the average age of a first-time buyer will rise to 43 years old, according to the National Housing Federation. assistance for novice buyers.
Redrow's Steve Morgan highlighted the difficulty first-time buyers face securing mortgage funding, laying the blame firmly at the door of the European regulator, rather than UK lenders.
"We are not blaming the banks," he said, "this comes down to Basel II and the restrictions on their balance sheets."
Morgan said the fact the average age of a first-time buyer with no parental assistance had already reached 37 years old was a ‘sad reflection' on the situation. He quoted the latest report from the National Housing Federation suggesting this will increase to 43 years of age for today's 21 year olds.
He called on the government either to provide tax breaks for first-time buyers, or to set up an insurance indemnity scheme for them which would allow higher loan-to-value lending.
In the past, insurance companies provided Mortgage Indemnity Guarantee cover on higher loan-to-value mortgages. Borrowers paid a premium for cover which protected the mortgage lender in the event of them defaulting on a loan at around 85%-90% loan to value.
However, since the onset of the credit crunch, insurers have withdrawn from this market. As mortgage lenders are now also far more risk-averse, and under Basel II rules have to set aside more capital against higher-risk lending, the availability of 85%-plus LTV mortgages favoured by many first-time buyers has plummeted.
Morgan's comments came as Redrow revealed its return to profit for the first time since H2 2007. In the six months to June 30, the housebuilder made pre-tax profits of £700,000, compared to a loss of £140.8m last year.
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