November 22nd 2024.
It's no secret that the current housing market in the UK can feel like an impossible task for those looking to get onto the property ladder. With sky-high property prices and hefty deposits, many young people, who have been coined as 'Generation Rent', are struggling to make their dream of homeownership a reality.
However, there is a glimmer of hope for first-time buyers as one mortgage provider has shaken up the traditional application process. Nationwide has become the first major lender to offer couples earning a combined income of £50,000 the opportunity to borrow up to £300,000 – six times their income. This is a significant increase compared to the traditional lending limit of four to five times the applicant's salary, which often locks many out of the housing market.
According to Gov UK, the average UK house price is now £282,000, while the Office for National Statistics (ONS) places typical weekly earnings at £651. In London, the situation is even more daunting, with the average house price soaring to £687,044. Terraced properties have sold for even higher amounts, with an average of £789,601 over the past year.
With these rising property prices, it's no wonder that the Helping Hand mortgage scheme from Nationwide has been a game-changer for first-time buyers. This scheme, which has been in place since 2021, allows for a 33% increase in borrowing compared to the company's standard lending agreement. It has already helped around 40,000 people onto the property ladder, with an average loan amount of £269,169 in London and the South West.
Nationwide's Chief Executive, Debbie Crosbie, explains the reasoning behind this move, stating that it aligns with the government's housing ambitions and showcases the benefits of being part of a modern mutual organization. She adds that they want to do more and are increasing the scheme's value to six times income, along with cutting interest rates, to solidify their position as one of the UK's largest lenders.
While the housing market may seem daunting, there are still some areas in the UK where homeownership without a mortgage is a reality. A recent study revealed the top 10 UK cities with the most homes owned outright, and surprisingly, London did not make the list. The quaint cathedral city of Wells in Somerset takes the crown, with a staggering 44.7% of homes without a mortgage. Chichester in West Sussex and Lichfield in Staffordshire follow closely with 42% and 41.4%, respectively.
It's worth noting that the average property price in Wells is slightly higher than the UK's nationwide average, according to Gov UK. But the fact that almost 50% of the population in this tiny city owns their home outright is a testament to the benefits of homeownership without a mortgage.
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