Current Property Market Offers Perfect Storm For First-Time Buyers

Current market conditions have been likened to the perfect storm for first time buyers (FTBs) looking to make their first home purchase.

A combination of stalling house prices, the Help to Buy ISA scheme and advantageous mortgage rates mean that chain free buyers are able to take advantage of the buyers-market and snap up a bargain.

Currently, according to recent research from Defaqto, the average 95% loan to value mortgage on a two-year fixed interest rate have reduced from 3.95% 12 months ago to 3.23% in the current climate.

The RICS UK Residential Market Survey report for April, found a ‘sharp decline’ in new instructions entering the market with 35% more contributors citing the current lack of housing stock and subsequent limited choice as a significant factor in hindering market activity.

Additionally, the housing stock entering the UK property market is at its lowest levels since the UK decided to leave the EU in June 2016.

Data from has found the average (median) time a property is spending on the market is now 89 days. In May 2018, this figure was only 78 days.

The last time properties were languishing unsold for so long in the month of May was in 2014. As Brexit uncertainty continues to envelop the property market, both buyers and sellers are remaining reticent about committing to a sale.

Defaqto claim that this places FTBs in a perfect position as a chain free buyer, making a speculative offer, could become a welcome proposition in slow market conditions. The fact that they are able to access 95% LTV mortgage products and utilise the Buy to Let ISA scheme until November means that buyers entering the property market are able to save for their deposit a lot quicker and will be in a position to take the housing market out of first gear.

Katie Brain, Insight Analyst at Defaqto, said:

“Buying a home is an expensive undertaking and for many years we have seen that first rung of the property ladder move further out of the reach of first-time buyers.

“Now, with stalling house prices and cheaper borrowing, we are entering a period of opportunity for buyers looking to make their first home purchase.

“However, if they wish to take advantage of the government’s Help to Buy ISA scheme, they are going to have to hurry.  Securing a 25% bonus from the government is not to be sniffed at but this really is a ‘use it or lose it’ moment for first time buyers.

“For those looking to get a mortgage, it is important to do your sums and check exactly what you can afford to borrow.

“While interest rates are low, an increase of just 1% can add hundreds of pounds to a monthly repayment and thousands to the overall cost of a home.

“It’s important to factor in what an increase could mean for your mortgage and whether you can afford it. If you need advice, talk to a qualified mortgage adviser who can recommend the best product for your needs.”

Have you noticed an increase in FTBs utilising current market conditions recently?

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