Lenders must relax mortgage rules, says Zoopla boss
Richard Donnell, data chief at the portal, says lending 'stress tests' must change if first-time buyers are to be able to afford mortgages.
Lenders will have to relax mortgage criteria to attract first-time buyers into the market next year, Zoopla data chief Richard Donnell told The Negotiator Conference on Friday.
He told delegates that the 8% stress test rates that banks and building societies add to home loan amounts push the purchase out of reach for some FTBs.
Donnell, who is Zoopla’s Executive Director, predicted mortgage lenders will have to lower the stress test amount to 6.5% or 6%.
Picture worsens
The financial picture for FTBs will worsen in April when temporary Stamp Duty relief ends, as they currently pay the tax if their new home costs more than £425,000, but it is set to drop to £300,000.
And evidence suggesting first-time buyers are racing against the clock to beat the Stamp Duty deadline, was released by Rightmove last week.
Donnell said only 20% of FTBs pay Stamp Duty at the moment, but that is due to increase to 40% after the Stamp Duty hike. It is set to hit the market as 36% of all buyers are FTBs.
Prices set to increase
The sales market is expected to see both prices and volumes increase in 2025 despite budget headwinds, according to the latest Zoopla House Price Index.
The market has returned to growth in all regions this year, with an average rate of +1.5% during the 12 months to October 2024, up from -1.2% last year. And the average house price is now £267,200.
Donnell told delegates that “it will still be a buyers’ market” next year, with existing home owners reluctant to take the plunge and make a move.
