Mortgage market problems 'will create more tenants'

News Category: Marketing

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The impact of the economic downturn on the UK mortgage market could lead to more potential first-time buyers (FTBs) opting to rent instead, it has been suggested.

Landlords and letting agents could receive more interest from potential tenants who have found themselves unable to secure the funds necessary to get a mortgage deal so they can enter the property market, the Council of Mortgage Lenders (CML) has indicated.

The CML said that FTBs are having to pay large deposits as a result of stricter lending criteria applied by lenders in the wake of the credit crunch.

Many FTBs have relied on loans from family members to pay for a deposit on a new home, but these funds could dry up if parents and grandparents are unable to draw on equity in their homes to pay for their children's first property, the group noted.

On the consequences of the economic downturn, the CML added: "Perhapsone outcome will be an increase in the number of young people becoming private tenants."

A study by Your Move last month reported a 50 per cent annual increase in demand for rented accommodation.

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