Matthew Addison

Why zero deposit mortgages will make the gap between rich and poor worse

A common opinion in today’s media is that millennials have it all – flexibility in jobs, a greater freedom to travel, and all the information they need at their fingertips. However, if you dive a bit deeper into the statistics, things don’t appear to be as rosy as we first thought. Today’s young face longer commutes than those before them and are confronted by an increasingly out of reach property sector. Over the last 20 years we’ve seen nothing short of a collapse in homeownership amongst younger people. In 1995-96, sixty five percent of those with incomes in the middle twenty percent for their age owned their own home. In 2015-16 the figure stood at twenty seven percent.

Those looking for a reason as to why won’t have to search hard. In the UK, house prices have risen by more than two hundred and fifty percent since 2000, far outpacing any increase in wages, which grew by just sixty eight percent across the same period. With house prices growing so markedly, so has the mortgage amount needed, locking many out of the market.

The biggest beneficiary of this trend has been the private rental sector. As more and more people found themselves priced out of the property market, the sector grew by more than one hundred and thirty seven percent from the mid-1990s to the mid-2010s to accommodate them. As such, can it be a surprise to hear that at the age of 30, millennials rent privately at twice the rate that Generation X did, and nearly four times the rate that baby boomers did.

At this point, some of you might be shouting: ‘We need to liberalise the laws surrounding home finance’ – and I’d agree, to a point. It isn’t the costs of servicing a mortgage that make it so hard to get on the ladder – the most recent data

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