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New Hope For First Time Buyers

The UK housing market is booming, which is good news if you own a property that you're looking to sell. But it's less good for first time buyers. Many of today's first time buyers are dealing with the legacy of student debt and easy credit. A recent survey found that more than half of the people who graduated five years ago are still unable to buy a home because of their debt level.

The net effect of student loans, student finance, graduate loans and other preferential finance offers, mean that some recent graduates owe more than £20,000, and may need up to ten years to repay what they owe. This level of debt is a big red flag to most potential mortgage lenders, which is why many people are delaying their entry to the property ladder.

But not all mortgage lenders shy away from this market. US investment banking powerhouse Morgan Stanley is moving into the UK by launching new mortgage products specifically for this market. The Flexishare mortgages, launched through its Advantage arm, are effectively mortgages combined with loans, secured against any increase in property values.

Part of the new product will work like a conventional mortgage for up to 80% of the property price. The rest will be a loan of between 15% and 35% of the home's value at a preferential interest rate. This means that young people looking to own their first home could potentially borrow enough to own a house and clear their debts. Morgan Stanley would take a share of the home's value if property values rise and would also absorb a share of any fall in property values. Morgan Stanley is also part of a government initiative to assist low income families with home ownership.

Other people who are targeting the former student market are buy to let investors. As well as seeking loans to buy student housing, many of them are now looking to invest in properties for first time buyers and young professionals. These may be terraced houses or flats, refurbished to a high standard, which are made available to people who are unable to purchase houses. Buy to let is a booming market sector and housing for young professionals is becoming a popular choice.

Morgan Stanley is just one of many global investment banks to buy into the UK market. This is seen positively by government, particularly when they can assist with shared equity schemes of this type.