3 & Easy: a mortgage fit for our times
A new year has brought renewed optimism about the housing market and the ability for first-time buyers to get onto the property ladder, with many more hopeful about becoming a homeowner than they were a year ago.
According to data from the Building Societies Association (BSA) a third of first-time buyers think now is a good time to buy a home (33%) which is almost double the number in the same period a year ago (16%). In November last year, the Bank of England reduced the base rate to 4.75%, marking the first cut in four years, and reduced it further in February this year to 4.5%, the lowest since June 2023.
This has helped to inject a sense of positivity among consumers overall, although affordability remains an issue, and household budgets remain tight. The Consumer Price Index including owner-occupiers’ housing costs (CPIH) rose by 3.9% in the 12 months to January 2025, up from 3.5% in December 2024 , according to the latest figures from the Office for National Statistics.
Further Bank of England rate cuts are predicted for 2025 and as a result mortgage lending in the UK is projected to more than double in 2025, increasing from 1.5% net growth in 2024 to 3.1%, according to the latest forecast from EY ITEM Club . However, with rising house prices and relatively higher mortgage rates persisting, mortgage lending growth is expected to remain steady over the coming years, with growth forecast at 3.2% (net) in 2026 and 3.6% (net) in 2027.
The aspiration to own a home is undoubtedly still there, but how to turn that into a reality is a huge stumbling block for many, who despite best efforts are victims of circumstances beyond their control. The most recent ONS figures show that average UK private rents increased by 8.7% in the 12 months to January 2025 (provisional estimate) and average house prices increased by 4.6% to £268,000 in the 12 months to December 2024 (provisional estimate).
With rents and house prices rising, many would-be buyers find themselves stuck in a cycle of paying higher rents, unable to save sufficient deposits as their disposable income is swallowed up by the increasing cost of living.
At Vida, we recognise these potential buyers and realise the unfairness of the predicament they are in, and it's why we have put out money where our mouth is with our new 3 & Easy deal.
Our new 97 per cent loan-to-value mortgage is aimed at first-time buyers who have good affordability measures but can’t realistically build up a larger deposit. There is no compromise on loan size, with the maximum loan available up to £750,000 and we have also allowed for a term of up to 45 years to ease affordability pressures, particularly for younger borrowers.
Clients also have the choice of five-year and seven-year fixed rates, with a fee-saver option available. Buyers who chose our 3 & Easy deal will also benefit from access to Vida’s flexible criteria which covers adverse credit history, complex incomes and second job income, self-employed and contractors.
We are confident that our 3 & Easy offering will help many potential first-time buyers, realise their dream of becoming a homeowner in 2025.