Credit ratings force borrowers to bite the mortgage lending bullet
Despite the current dearth in mortgage borrowing, young professionals are no less keen to get onto the property ladder.
But as borrowers feel an increasingly nasty pinch, it may well be the smear of debt on credit ratings that will count against those seeking mortgages for professionals, rather than their ability to meet mortgage repayments.
High-hopes
The most recent indication of the positive borrower attitude comes via research by Alliance & Leicester, which indicates that many young professionals are targeting homeownership before their 30th birthday.
Indeed, 57 per cent of 18 to 29-year-olds have set property ownership by 30 as one of their key life goal milestones. Historically, statistics provide support for this high expectation, with more than two-thirds of survey respondents admitting that they bought their home by the end of their 20s.
However, not unbeknownst to these young champions of positive financial outlooks, the world is currently undergoing one of the most challenging economic periods in recent history, matched only in the housing market by the 1980's market crash.
This has been most recently evidenced in the latest UK mortgage approval figures from the British Bankers Association (BBA), which revealed that mortgage lending in February 2008 slumped by a third compared to the same period last year.
But does this leave young professionals, such as graduates, trainee doctors and investment bankers, high and dry?
Counting the cost of credit
Mortgages are without a doubt one of the largest credit commitments that young professionals are likely to have to make in terms of personal finance. However, for those keen on purchasing a house before they reach 30, it is also one of the most important.
But according to Anne Young, savings expert at Scottish Widows, young people are not well educated enough about managing credit.
"It's the proliferation of credit that is available now. A lot of children find themselves spending on credit cards up to their limit," she explains. If this is true, then our young professional's housing market optimism could well be misguided and naive.
Indeed, the looming prospect of mortgage equity withdrawal "is likely to hit homeowners looking for cheaper sources of credit to finance big ticket purchases," according to chief economist of the Royal Institute of Chartered Surveyors (Rics), Simon Rubinsohn.
Commenting on the BBA figures, principal consultant of banking at Defacto, David Black, seemed to agree. In particular, he noted that now even current homeowners are turning to secured loans rather than remortgaging because of the deterioration of their credit rating since taking out their original mortgage.
So for those hell bent on celebrating homeowning on their 30th birthday, as much heed needs to be paid to keeping their bank balances positive as their housing hopes.
Mortgages for professionals is a whole-of-market broker providing expert mortgage advice to high earning professionals such as pharmacists, engineers and doctors
But as borrowers feel an increasingly nasty pinch, it may well be the smear of debt on credit ratings that will count against those seeking mortgages for professionals, rather than their ability to meet mortgage repayments.
High-hopes
The most recent indication of the positive borrower attitude comes via research by Alliance & Leicester, which indicates that many young professionals are targeting homeownership before their 30th birthday.
Indeed, 57 per cent of 18 to 29-year-olds have set property ownership by 30 as one of their key life goal milestones. Historically, statistics provide support for this high expectation, with more than two-thirds of survey respondents admitting that they bought their home by the end of their 20s.
However, not unbeknownst to these young champions of positive financial outlooks, the world is currently undergoing one of the most challenging economic periods in recent history, matched only in the housing market by the 1980's market crash.
This has been most recently evidenced in the latest UK mortgage approval figures from the British Bankers Association (BBA), which revealed that mortgage lending in February 2008 slumped by a third compared to the same period last year.
But does this leave young professionals, such as graduates, trainee doctors and investment bankers, high and dry?
Counting the cost of credit
Mortgages are without a doubt one of the largest credit commitments that young professionals are likely to have to make in terms of personal finance. However, for those keen on purchasing a house before they reach 30, it is also one of the most important.
But according to Anne Young, savings expert at Scottish Widows, young people are not well educated enough about managing credit.
"It's the proliferation of credit that is available now. A lot of children find themselves spending on credit cards up to their limit," she explains. If this is true, then our young professional's housing market optimism could well be misguided and naive.
Indeed, the looming prospect of mortgage equity withdrawal "is likely to hit homeowners looking for cheaper sources of credit to finance big ticket purchases," according to chief economist of the Royal Institute of Chartered Surveyors (Rics), Simon Rubinsohn.
Commenting on the BBA figures, principal consultant of banking at Defacto, David Black, seemed to agree. In particular, he noted that now even current homeowners are turning to secured loans rather than remortgaging because of the deterioration of their credit rating since taking out their original mortgage.
So for those hell bent on celebrating homeowning on their 30th birthday, as much heed needs to be paid to keeping their bank balances positive as their housing hopes.
Mortgages for professionals is a whole-of-market broker providing expert mortgage advice to high earning professionals such as pharmacists, engineers and doctors
