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First-time buyers need more flexibility, says CML

More flexible options are needed to get first-time buyers onto the property ladder says the UK's Council of Mortgage Lenders (CML).

New research from CML found that rising house prices, growing student debt and young adults increasing desire to be mobile pose fundamental questions for policy makers trying to make home-ownership more affordable for the young.

CML concludes that the most effective policies for providing affordable home-ownership will be those that offer the flexibility for young home buyers to take on only levels of mortgage debt that are prudent given their incomes and other financial commitments.

The research found that higher levels of student debt are likely to make the transition into home-ownership slower – and more challenging – for young people. As a result home-ownership rates for young adults could fall further in the coming years.

For today’s young adults, mobility for career and other reasons is an important factor. While home-ownership remains a long term aspiration for the majority, the reality is that for many young people the combination of house prices and student debt is reinforcing a lifestyle choice in favor of renting, said Bob Pannell, head of research at the CML.

The CML remains keen to explore new ways of getting first-time buyers onto the property ladder where possible. The Open Market Homebuy scheme will be launched in October with lenders contributing to a shared equity loan. We hope this can be a platform for a more flexible approach and we urge the government to work with lenders to develop innovative ways of helping young people who want to buy their own home, Mr Pannell added.

CML is made up of banks, building societies and other lenders who together undertake around 98% of all residential mortgage lending in the UK. There are currently 11.6 million mortgages in the UK, with loans worth around GBP1 trillion.