Skipton: Will deposit-free mortgages help budding first-time buyers?

Skipton Building Society, the fourth largest building society in the UK, was formed in Skipton almost 170 years ago

A new deal by Skipton Building Society offers renters the chance of a mortgage with no deposit needed.

The BBC headed to the North Yorkshire market town which the building society calls home to see if would-be buyers were sold on the idea.

"A house is made of walls and beams, a home is made of hopes and dreams", reads a furniture shop sign on Skipton's bustling High Street.

But for those who currently rent in and around the market town, many feel their only option is to move away to make this dream a reality.

"There's so many people like me who need affordable housing," says 24-year-old Holly Wardman, who lives in the nearby village of Carleton where rent is cheaper.

"The ones being built are massive family homes for people who are already homeowners, who have dual income behind them - they're not thinking of people my age."

Holly Wardman, 24, says she wishes to stay in a rural location but feels prices are forcing young people to leave

Ms Wardman, a teacher who works across the nearby Lancashire border, says her initial excitement about the 100% mortgages quickly vanished after using the company's affordability calculator.

The new Skipton Building Society mortgage offer is available for the same amount as you currently pay in rent, so for Ms Wardman the total is £625 a month.

"When you put it into the calculator it said I could borrow just over £116,000, there's no way I'm going to get anywhere in Skipton for that money," she says.

For a home similar to the two-bed house she's currently renting, her maths equate to a £109,000 shortfall to the £225,000 she would require.

She says she would pass the other requirements, which are 12 months of on-time rental payments and a good credit history.

"They're not thinking of people my age, it's like they don't want us to stay in the area and move us towards cities," she says.

How much is a house in Skipton?

• The average property price in Skipton, which has a population of about 15,000, was £244,145 as of September 2022

• The market town is made up of four wards, with the average home in each ward ranging from £176,827 to £345,678

• Craven, the wider district, has an average house price of £245,000 as of September 2022

• In Craven, full-time employees could expect to spend 8.29 times their annual earnings on purchasing a home in the district

• A decade earlier the ratio was 7.40 times their annual earnings

Source: Office for National Statistics

Aidan Sherrington, a 26-year-old lecturer at Craven College, heard the mortgage news on the radio during his 20-minute commute from Colne in Lancashire to Skipton.

"I thought it was a nice gesture, but I think it's a sticking plaster which doesn't really solve the issue," he says.

"The average rent in Skipton is about £800 for a two-bed house, if you only paid £800 towards the mortgage you'd probably never pay it off with the rate of the interest, or you'd be paying it off for more than 40 years - it's just depressing."

Aidan Sherrington, a lecturer at Craven College, says people face "sky-high house prices" and long mortgage terms

The rate for Skipton's latest 100% deal is 5.49%, which is more expensive than its current average five-year fixed deal of 5%.

There are 15 other zero-deposit products on the market, according to financial data firm Moneyfacts, but all need the financial backing of a guarantor unlike the Skipton product.

"If buying was much easier we'd do it," Mr Sherrington, who rents with his partner, says.

"It's a Catch 22, do you go somewhere further out which is isolated but is cheaper and you can buy, or do you go and rent somewhere where you can't buy?"

He adds: "Unless stock increases and prices come down the mortgage availability isn't going to change how we can access housing."

• First time home buyers: How much can I borrow?

• Be careful with 100% mortgages, homebuyers told

• Deposit-free mortgage aimed at renters launched

The lender, which is the UK's fourth biggest building society and was formed in the town in 1853, says it spotted a "gap in the market", with rising rents and the cost of living limiting savings for deposits.

In nearby Silsden, the independent mortgage adviser Mortgages with Hannie & Co says it had a "record" 100 enquiries about the product within 24 hours of the announcement.

Meanwhile, mortgage consultant Dan Wearden, based in Skipton town centre, thinks the product will "help a lot of people".

"It'll promote competition and stimulate the market a bit, I think it'll stimulate new products being released," Mr Wearden, of AJ Hird, says.

"I had some initial concerns but then read the term and conditions which answered a lot of my questions."

Skipton has a population of about 15,000 and balances rural living with convenient local amenities

Zero deposit mortgages have been seen as riskier loans, and were one of the contributing factors behind the 2008 financial crisis, when many borrowers found themselves unable to afford repayments.

On Thursday, the Bank of England warned the risks needed to be "well assessed" by both lenders and borrowers.

"There's a lot more criteria and regulation in place than there was before," says Mr Wearden.

"I now feel comfortable recommending these deals."

Skipton has featured in Rightmove's annual Happy at Home study as one of the "happiest places to live" in Great Britain multiple times

Estate agent Tom Exley says he'd "100% live in Skipton tomorrow" if he could, with his office busy with requests for viewings on properties to buy and to let.

"At the moment we put a property on the market in Skipton and we'll have five applications for it, they go within a week," he says.

"Rents have gone up massively because of the shortage of availability, there's also a lot of first-time buyers about and those properties are also going very quickly."

Mr Exley, director at Carling Jones, says home prices were "gradually rising", with the increase in holiday lets being one of the most significant changes in his eight years working in and around Skipton.

"People want convenience, so either being in Skipton or a nearby village," he says.

"It'll be interesting to see over the next couple of months how easy it is for applicants to get the mortgage once it has gone to underwriters."

Tom Exley, director at Carling Jones in Skipton, describes the local housing market as "very stable" with prices "gradually rising"

For Katie Fox, a 26-year-old safeguarding officer who commutes from Burnley to Skipton each day, a regular scroll of the available properties on her Rightmove app has failed to provide any joy thus far.

"I've looked in Skipton, but it became quite apparent it's not feasible for one person, or maybe even for two people at this point," she says.

Ms Fox has been living with her family to save for a deposit, but "liked the theory" of the 100% mortgage.

"It's not just people my age but there's older people in the area who also can't afford houses," she says.

"When you get stuck in that rental loop you can't save because of the rent, so I think it's a good step - it may give people hope."

Photos by Tom Airey

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