Are Circumstances Beginning to Favour First Time Homebuyers?

First time buyers have a higher chance of getting on the property ladder than has been possible in recent history due to a number of factors.

365,000 homes were sold to first time buyers in 2017, which is the highest level since the 2007/2008 financial crisis.

Homeowners are moving less and the buy to let market has been dealt a blow by changes in government regulations. The new stamp duty tax break and help to buy scheme have added to the positive developments for first time buyers.

The increase in borrowing options, the advent of the Help to Buy ISA and the "Bank of Mum & Dad" are all important factors according to Craig Hall of Legal & General Mortgage Club.

According to Shaun Church of Private Finance:

“The cost of funding a mortgage with only 5pc or 10pc equity is much lower now than it was three years ago. You can get a 90pc loan-to-value mortgage for around 2pc.

“First-time buyers are also competing much less with landlords on the market after the changes to stamp duty and tax relief for buy-to-let investors.”

Sainsbury's bank now offers a range of mortgages for buyers with only 5% equity, with two and five year fixes of 3.49% and 4.05% respectively.

Savills, the estate agents have published figures that indicate that the costs associated with servicing a mortgage are lower than those faced by homeowners 40 years ago. Homeowners spent 13% of their income on mortgage payments in 1977, compared with 8% in 2017.

Deposits however, have shot up massively, with only 12% of income necessary to secure a deposit in 1977 compared with 65% in 2017.

The high possibility of rate rises is a factor that should not be ignored, with mortgage borrowers choosing to fix rates for longer in response.

Two year fixed rates are losing popularity according to mortgage brokers L&C and Habito, with the popularity of 5 year deals on the rise.

Are you thinking of making a move this year? Our Mortgage team here at Westminster Wealth can ensure that you receive the most suitable mortgage for your personal circumstances, needs and objectives. Contact us today.

Your home may be repossessed if you do not keep up repayments on your mortgage.

Our charges are usually between £395 and £995 depending on the type and amount of borrowing required and individual circumstances.