Majority of first-time buyers unable to get a personal loan

Mon, 04 Apr 2011

A new survey by high street bank HSBC has revealed that only about a fifth of potential first-time buyers are being successful in their home loan application. With managing to get on the housing ladder becoming increasingly difficult in the UK, especially for first-time buyers, the lack of funding in the market and application restrictions is stopping many people from buying their first home.

The survey by HSBC questioned 1,350 people who do not own their own home but want to take out a homeowner loan to do so, finding that about 80 per cent of respondents claimed that they would not be able to afford a loan, or even be able to put down the relevant deposit, during the next five years.

The report found the average price of a first-time buyer property to be GBP136,842, or about 6.6 times the average wage of GBP20, 654 for a typical first-time buyer. When you consider that most lenders will only offer a loan of up to four times income due to affordability, there are many people facing too big a gap between expectation and market reality.

If these numbers were extrapolated over the whole country, it would mean there could be hundreds of thousands of possible first time buyers in the UK who are being denied a home loan due to a lack of affordability.
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