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A new deposit-free mortgage designed to help "trapped renters" to "commence their home ownership dream" will not be available in Jersey due to "extended affordability challenges in the Channel Islands".
Heralded as a game-changer, Skipton Building Society’s '100% Rent Track Record Mortgage' for first-time buyers was announced yesterday in the UK.
However, a statement today from Skipton International – the Channel Islands' offshoot of Skipton Building Society – confirmed that there are "no plans" to implement the product locally, citing the "the substantial affordability challenges that first time buyers face across the Channel Islands, which are far higher than the UK".
The Track Record Mortgage is available only for renters in the UK who have a clean credit record and who have demonstrated at least 12 months of successful payment of their rent.
It also has constrained affordability criteria compared to deposit mortgages and other checks to mitigate mortgagees from over extending themselves, and is therefore not suitable for everyone.
Announcing the launch of the Track Record Mortgage in the UK, the Chief Executive of Home Financing at Skipton, Charlotte Harrison said: "People trapped in renting is one of the UK's biggest housing challenges, having a massive impact on the fabric of our society.
"With escalating rents and the cost of living squeeze further impacting people's ability to save for a house deposit – it's making it almost impossible for people get onto the property ladder."
Pictured: "People trapped in renting is one of the UK's biggest housing challenges, having a massive impact on the fabric of our society."
She noted that there is a "clear gap in the market" for people who have a history of renting so can prove they can afford mortgage payments, but added that "there is currently no solution for them to buy a property due to lack of savings or access to family wealth".
However, Jim Coupe, a Skipton Group Building Society Executive Committee member and Skipton International’s Managing Director, explained that, "with extended affordability challenges in the Channel Islands the constrained affordability of the Track Record Mortgage would not support first-time buyer purchases."
He added: “Skipton International will be monitoring the development and success of the Track Record Mortgage with interest but has no plans to implement in the Channel Islands at present."
Mr Coupe instead pointed islanders towards the 'Next Generation Mortgage' which has been offered in the Channel Islands since 2010, and is unique to local markets.
While this product also offers 100% Loan to Value, the Next Generation Mortgage requires a guarantee provided by a close family member.
Other UK banks and building societies are coming up with innovative ways to help 'Generation Rent' get on the property ladder.
A new partnership between Leeds Building Society and the credit reference agency Experian allows extra evidence of a prospective borrower’s financial history – such as a £30-a-month Pret-a-Manger coffee subscription or £10.99-a-month Netflix plan – to be factored into mortgage lending decisions.
Pictured: Subscriptions to digital entertainment services could help the younger generation boost their credit score and secure their first home.
The partnership means that the previous 12 months of an applicant’s regular debit payments, such as council tax and subscriptions to digital entertainment services, will help improve their credit score. The idea is that these payments show that the prospective borrower can handle monthly payments.
Richard Fearon, Chief Executive of Leeds Building Society, said the scheme would “particularly help younger borrowers, first-time buyers and anyone on lower incomes”.
He added: “Often through no fault of their own, these groups can struggle to build a good credit score because they need to spend most of their earnings on rent and other regular payments.”
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