Home Truths

Where will first-timers find the cash for a deposit now?

WHERE CAN first-time buyers raise deposits, now that lenders are closing the options? Yes, I know there is a shiver of déja vu from the height of the boom, when prices soared and couples were hard pushed to find the deposits.

Many, as you know, went double-jobbing and tweaked parents for the family savings.

Well, parents can brace themselves again, for the wheedling of younger siblings. Except now, the family savings are reduced, if in bonds, insurance policies or share portfolios, devalued by about half in the past 18 months.

Not much point in cashing those at a loss, as parents look to their own inheritance, to save for themselves. No consolations there for the first-time buyers and younger siblings, who may feel, as younger siblings are wont to, that life has again dealt them the bitter blow of - well, being a younger sibling.

Their victimhood is more pressing than during the boom. Then, earnings were higher and credit was profligate. Now, the credit market is resonant with the panic banging of stable doors, after bolting horses, all of them named "subprime". Never mind that within recent memory, lenders were practically dragging first-time buyers off the streets, dragooning them with 100 per cent mortgages and press-ganging them into 35-year loans.

That was then. This is now - a time of a different complexion. Now credit managers are scrutinising applications for evidence of those extra earnings which before they took at face value. Now, they want to see the bank statements and overtime pay slips to support the claims of the hapless first-time buyers, who may have, in the wonder of the volatile market, actually found a genuine bargain of a property.

Because, for the same reasons that credit is tight, value is out there, developers are facing difficult times unless they shift the properties, so are cutting their profits to the bone. But, again for the same reason, from the lenders' perspective, 100 per cent monies advanced on a property of say, €480,000 two years ago is now a lesser security to the lender of, say, €380,000.

Multiply that scenario by a few hundred thousand advances and you can see why, in recent weeks, credit managers have gone off their golf stroke and wake in the middle of the night, gibbering "I didn't lend, I didn't lend . . . it wasn't me!"

As a result, first-time buyers feel like they are getting interrogations of the Guantanamo Bay variety, in spite of providing copious documentation and medical reports to support their application as well as fitting the lender's desired "profile" of having two jobs, preferably not in financial services.

Banks are now looking more favourably upon public servants, gardai, teachers and nurses. In effect we are back to the old reliables. Oh - and it helps to be under 40 years old and to have blue eyes.

All that, for a possible 80 per cent loan. Which leaves our first-time buyers twisting in the wind to find around €50,000 to €80,000 to secure the property, which they know is already a bargain, compared to prices of a year ago. So, where to find the dosh?

Unfortunately, dear first-time buyer and younger sibling, I do not have the answer.

All I suggest is, you grin and bear it, as your parents did. Long walks in the hills, prayer and abstinence and four Marbella breaks a year instead of five. It might help to keep two graphs, one of share prices (rising slowly) and the other of house prices (falling faster).

When the two lines cross, go back to the parents for the inheritance. In the meantime, keep doing the Lotto.