New data from the English Housing Survey shows the number of outright homeowners is greater than those buying with a mortgage.
The survey collected data in 2014 and reveals the difficulty for a generation of younger first time buyers unable to secure a mortgage as house prices rise.
Rising house prices means first time buyers would require a higher deposit, larger mortgage or higher earnings to purchase their first home.
Of the 22.6 million homes 14.3 million are owner occupiers of which 7.4 million own their properties outright and 6.9 million are mortgage buyers. This compares to the previous year where there were equal amounts of outright and mortgaged households.
The total number of owner occupiers increased from the 1980s to 2003 reaching a peak of 71% of all households but has declined to only 63% today.
Harder to buy for younger people
Fewer young people are able to buy and over the past 10 years the number of owner occupiers aged 25-34, either outright or buying with a mortgage, has reduced from 59% to 36% today.
In contrast older borrowers have taken advantage of lower interest rates to with remortgage buyers reducing the cost of the loan and paying off the mortgage faster.
At the same time new mortgage rules introduced by the mortgage market review (MMR) has made it more difficult for first time buyers to secure a mortgage. Lenders must now consider income and outgoings such as child care, holidays and living costs.
Home movers wanting to trade up when prices are rising may have difficulties as their next property is more expensive which means they need a larger deposit or mortga
Mortgage products with low deposits
The mortgage market has improved considerably in 2014 with a greater number of products offering loan to values of 90% and even 95% to help first time buyers, home movers and remortgage buyers with smaller deposits.
Help for first time buyers can come from family members as the equity release buyer can access money using a lifetime mortgage and gift children or grandchild the deposit for their home.
Even so the English Housing Survey shows that the private rental sector has increased to 19% or 4.4 million of all households and social housing remaining level at 3.9 million.
In London the figures are more extreme with private rental sector proportion of households is now 30% compared to 14% in 2003 when the majority of households were buyers with a mortgage.
For those aged 25-34 the proportion renting has more than doubled increasing from 21% in 2003 to 48% in 2014. Even with the lower interest rates and lenders requiring smaller deposits this age group struggles to afford their first home.
The trend of more outright homeowners to buyers with a mortgage is likely to continue due to an aging population paying off their mortgages, rising house prices and a lack of supply of affordable new build homes.
What are your next steps?
Call our LCM mortgage brokers for advice if you are a first time buyer, want to remortgage your existing home for the best mortgage deal, moving home or are a buy-to-let investor.
Start with a free mortgage quote or call us and we can take your details. Learn more by using the property value tracker chart, mortgage monthly cost calculator and equity release calculator.
For equity release buyers our London City Mortgage advisers can recommend lifetime mortgages allowing you to receive cash from your property for home improvements, holidays or even give to a family member.
Use your dashboard to access online mortgage quotes, money off vouchers and start your mortgage application online 24/7 on desktop, tablet or smartphone.
