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CML: Parents help FTBs to come up with deposit
29 April 2008 10:30
Many first-time buyers (FTBs) are relying on their parents to fund their deposits due to the current dearth of high loan-to-value products, according to the Council of Mortgage Lenders (CML).
The National Association of Estate Agents recently reported that FTBs accounted for just 8.3 per cent of property acquisitions in March because of a lack of mortgage finance on offer, while Abbey withdrew the last available 100 per cent deal at the start of April.
In the absence of these products, CML spokesperson Bernard Clarke noted that family has increasingly become the main option through which new buyers have been able to finance house purchases, although he noted that this option was not open to everyone.
Yet he asserted that parents who have owned their homes for a long period of time are likely to have enjoyed substantial equity growth on which they can draw in order to pay for their children's deposits, regardless of the present slowdown in the property market.
However, Mr Clarke was more wary over borrowers paying for deposits with unsecured loans, arguing that while servicing two debts may be viable for those with high incomes but lacking in immediate liquidity, these buyers are very much a minority among FTBs.
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