Nearly half of Brits think the bank of mum & dad will be the only way for young people to get on the property ladder
New Equifax research reveals post-Brexit fears about interest rates and property prices
According to new data from YouGov, prospects for the younger generations to get on the property ladder are not looking good. 45% of respondents* to the research commissioned by Equifax, the credit information provider, strongly agreed that ‘young people (16-24) today will generally be unable to get onto the property ladder without a considerable amount of financial support from their parents or grandparents’. And when looking at responses from young people themselves aged 18-34, the numbers increased to 51%.
"Over two thirds of Brits (68%) are either very or fairly concerned that the younger generation is finding it increasingly difficult to get into home ownership", explained Lisa Hardstaff, credit information expert at Equifax. "Perhaps not surprisingly, it is the youngest generations that are the most concerned, with over half (54%) of 18-24 year olds very concerned, followed by 34% of 25-34 year olds. However, the parents’ generation are worried too, with 29% of those aged 55+ also very concerned."
Equifax is urging prospective homeowners – whatever their age - to understand the importance of their credit information in the mortgage application process. "The reality is that mortgage lenders will take a good look at a person’s financial situation when assessing an application," continued Lisa Hardstaff. "This includes looking at information on their credit report. If they have missed or made a late payment on a credit or service agreement, this could be a cause for concern for prospective lenders. Also, having too many credit agreements could indicate that a person is financially overstretching themselves. Too few, however, and a lender may find it difficult to assess how the person will perform when it comes to repaying their mortgage.
"We would therefore suggest that anyone considering applying for a mortgage should check their credit report at least six months before submitting their application. This will enable them to ensure that any changes that might need to be made – such as updating their electoral registration or making sure the report data is correct – are done before a mortgage application is made. This is also a good time to review how individuals are managing their current credit commitments as establishing a pattern of good financial behaviour gives you the best chance of having a successful application at the interest rate and loan amount that you want."
Lenders also have a duty to assess the long-term affordability of an applicant. Affordability checks are designed to make sure the applicant can afford the repayments both now and in the future. The checks will also take into consideration potential interest rate increases as well as significant life events that may affect future repayments. Borrowers should therefore expect to be asked questions about spending habits, childcare costs and future financial plans. But when it came to checking an applicant’s social media accounts as part of this process, over two thirds (71%) of respondents to the Equifax research did not believe this was acceptable.
"Clearly, affordability is at the heart of the current challenges in the UK property market," added Joanne Atkin, Editor of What Mortgage magazine. "This is emphasised by the fact that 39% of respondents to the Equifax-commissioned research believe that the average cost to buy a home will increase as a result of the UK’s exit from the European Union. And over a third (37%) of respondents who currently have a mortgage said that they are concerned about being able to afford their mortgage payments over the next three years."
Home buyers can get a copy of their Equifax Credit Report, which is accessible for 30 days free simply by logging onto https://my.equifax.co.uk/. If customers do not cancel before the end of the 30 Day Free Trial, the service will continue at £9.95 per month, giving them unlimited online access to their credit information and weekly alerts on any changes to their credit file. It also includes an online dispute facility to help them correct any errors on their credit file simply and quickly.
* All figures, unless otherwise stated, are from YouGov Plc. Total sample size was 2050 adults. Fieldwork was undertaken between 23rd - 24th February 2017. The survey was carried out online. The figures have been weighted and are representative of all GB adults (aged 18+).
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Equifax, Inc. ("Equifax") powers the financial future of individuals and organizations around the world. Using the combined strength of unique trusted data, technology and innovative analytics, Equifax has grown from a consumer credit company into a leading provider of insights and knowledge that helps its customers make informed decisions. The company organizes, assimilates and analyses data on more than 800 million consumers and more than 88 million businesses worldwide, and its databases include employee data contributed from more than 5,000 employers.
Headquartered in Atlanta, Ga., Equifax operates or has investments in 24 countries in North America, Central and South America, Europe and the Asia Pacific region. It is a member of Standard & Poor's (S&P) 500® Index, and its common stock is traded on the New York Stock Exchange (NYSE) under the symbol EFX. Equifax employs approximately 9,200 employees worldwide.
Some noteworthy achievements for the company include: Ranked 13 on the American Banker FinTech Forward list (2015); named a Top Technology Provider on the FinTech 100 list (2004-2015); named an InformationWeek Elite 100 Winner (2014-2015); named a Top Workplace by Atlanta Journal Constitution (2013-2015); named one of Fortune’s World’s Most Admired Companies (2011-2015); named one of Forbes’ World’s 100 Most Innovative Companies (2015). For more information, visit www.equifax.com
Equifax Limited is one of the Equifax group companies based in the UK.
Equifax Limited is authorised and regulated by the Financial Conduct Authority.