There are 600,000 fewer homeowners than there should be if homeownership levels were in line with 2010 figures, a lender has said.
According to analysis from Perenna, which compared the Office for National Statistics’ (ONS’) English Housing Survey data between 2010 and 2023 and applied tenure levels from 2010 to current figures, this number of people was the equivalent of a city the size of Leeds or Liverpool who are not homeowners.
The report found that there are over one-and-a-half million fewer homes that are owned by a mortgage compared to 2010.
Within that figure, 900,000 own their home outright and 600,000 are privately renting.
Perenna said that, for older borrowers, this was a “story of success”, as they have paid off their mortgage and are homeowners in their own right, but for younger households it indicated that they are not able to buy and were renting.
The figures also showed that there were around 380,000 fewer homeowners aged between 25 and 44 years old than if homeownership levels were in line with 2010.
The lender said that there were several factors that were leading to a fall in homeownership levels. This includes rising house prices and strict loan-to-income (LTI) limits.
Perenna made two policy demands of Labour, who came into power on Friday, including embracing long-term fixed rates and removing the LTI cap.
The lender explained that the mortgage market was “heavily tilted” towards short-term fixed rate deals, which “introduce significant interest rate risk onto borrowers”.
If this risk was removed, then people could “borrow more responsibly, helping first-time buyers into homeownership earlier in their lives”.
The lender called on the government to “support innovators and start-ups and encourage the development of longer-term fixed rate mortgages, which would allow people more choice over the level of interest rate risk they are willing to take on and enter homeownership at a much earlier point in life”.
‘Serious long-term consequences’
Perenna said that the LTI cap limited lending for many lenders to four-and-a-half times income for around 15% of loan books, and larger lenders typically prioritised this lending for borrowers who are “already firmly placed on the ladder and are wealthy”.
As long-term fixed rates protect borrowers from interest rate spikes, borrowers can access more than four-and-a-half times their income and afford monthly payments without taking the risk of payment shocks.
Arjan Verbeek (pictured), CEO of Perenna, said: “There are serious long-term consequences of more and more people and families unable to access homeownership, which will create issues in the future.
“The mortgage market needs new types of products that offer consumers more choice and can responsibly help them into homeownership earlier in life. Our call to action outlines clear solutions [that] offer hope that many people can become homeowners.
“It is essential that Labour unlocks the long-term fixed rate mortgage market to prevent another 600,000 missing homeowners”.
Anna is currently the deputy editor for Mortgage Solutions and editor for Specialist Lending Solutions. She has worked as a journalist since 2019, having secured her Gold Standard NCTJ diploma from News Associates in a fast-track six-month course.
She started her career as a report at specialist publication The Insurance Insider covering a wide range of areas before joining Mortgage Solutions and Specialist Lending Solutions in 2021.
In her role, she helps put together and structure the news agenda for the day and writes up press releases, reports, interviews, analyses and exclusives across both titles. She also commissions blogs for Specialist Lending Solutions and hosts online masterclasses and in-person events across the business.
She has been shortlisted for three journalism awards, which include BIBA Journalist and Media Awards Scoop of Year Award in 2020, Headline Money Mortgage Journalist of the Year Award (B2B) in 2022 and 2023.
Prior to being a journalist, Anna worked in ecommerce across Snow + Rock, Cycle Surgery and Runners Need websites, and before that worked at specialist financial PR firm Rostrum.
In her spare time, Anna enjoys reading, seeing live music, and cooking for friends and family. When she gets a chance, she also enjoys hiking, skiing and indoor rock climbing.
