HSBC increases minimum deposit for flats to 15% or 20% for new-builds in latest blow for first-time buyers
FIRST-time buyers were dealt a further blow after HSBC hiked up their minimum deposit for flats.
The high-street bank has been one of the few who were still offering mortgages to buyers with a 10% deposit.
But from Monday, house hunters will need a minimum of a 15% or 20% deposit if they are purchasing a new-build.
This move will be a huge set back for many young people trying to get on the property ladder and cash in on the stamp duty holiday.
HSBC is not the only mortgage provider to tighten its lending criteria for first-time buyers.
Lloyds has also temporarily suspended it’s 100% mortgage scheme ‘Lend a Hand’.
According to Moneyfacts, those wanting to borrow 90% for a mortgage, there are only 48 deals on offer currently, compared to 758 a year ago.
And that’s not the only thing that has hit first-time buyers. Earlier this week, The Sun revealed that some buyers will not be able to use the Help-to-Buy scheme on new build homes in certain cities.
Property expert, Henry Pryor, told The Sun: “It doesn’t come as a surprise that lenders have taken a robust approach to the current financial climate.
"Whilst we have seen a lockdown bounce, this is expected to come to an end and lenders are preparing themselves for a reasonably bleak winter."
What help is out there for first-time buyers?
GETTING on the property ladder can feel like a daunting task but there are schemes out there to help first-time buyers have their own home.
Help to Buy Isa - It's a tax-free savings account where for every £200 you save, the Government will add an extra £50. But there's a maximum limit of £3,000 which is paid to your solicitor when you move. These accounts have now closed to new applicants but those who already hold one have until November 2029 to use it.
Help to Buy equity loan - The Government will lend you up to 20% of the home's value - or 40% in London - after you've put down a 5% deposit. The loan is on top of a normal mortgage but it can only be used to buy a new build property.
Lifetime Isa - This is another Government scheme that gives anyone aged 18 to 39 the chance to save tax-free and get a bonus of up to £32,000 towards their first home. You can save up to £4,000 a year and the Government will add 25% on top.
Shared ownership - Co-owning with a housing association means you can buy a part of the property and pay rent on the remaining amount. You can buy anything from 25% to 75% of the property but you're restricted to specific ones.
"First dibs" in London - London Mayor Sadiq Khan is working on a scheme that will restrict sales of all new-build homes in the capital up to £350,000 to UK buyers for three months before any overseas marketing can take place.
Starter Home Initiative - A Government scheme that will see 200,000 new-build homes in England sold to first-time buyers with a 20% discount by 2020. To receive updates on the progress of these homes you can register your interest on the website.
Last month Nationwide announced that buyers applying with a 10% deposit must prove that no more than a quarter of their funds was given to them by their parents.
HSBC blamed "business reasons" for putting restrictions on flats.
It claimed it will continue to support the housing market, including first-time buyers.
A HSBC spokesperson said: “We regularly review our products, rates and mortgage criteria to ensure we offer competitive mortgages and that we can provide a good service to brokers and customers who approach us directly."