Interest rates on first-time buyers mortgages have fallen
Now just might be the perfect time for first-time buyers to enter the property market.
Thanks to the availability of low-cost mortgages and steady housing prices.
Research by the Bank of England shows that as of June 2019, 10-year fixed mortgage rates were at their second-lowest since records began, at just over 2.6 per cent.
These low rates are particularly good news for first-time home buyers and those remortgaging their property.
Their repayments will not only be more affordable now but if wages increase they will use up less disposable income as time goes on given repayments won’t change for 10 years.
Although interest rates are low, there has also been a smaller number of sales within the property market.
This is shown in the latest data from HMRC, with a dramatic year-on-year drop of 12% in the number of residential transactions in July 2019 (86,630).
A lower number of sales can indicate market uncertainty, which is often triggered by events such as an election or referendum.
The fact that fewer people are buying homes can, however, be seen as a positive opportunity for potential buyers.
There is less competition and housing prices remain stable.
Additionally, since fewer homes are coming onto the market, first-time buyers with a mortgage in place are more motivated to commit when they do find the home of their dreams.
This is a promising time for sellers too.
What help is available for first-time buyers?
Although getting onto the property ladder may seem daunting, there are many schemes and incentives in place to help first-time buyers become home-owners.
“First dibs” in London
London Mayor Sadiq Khan is working on a scheme that will restrict sales of all London new-build homes up to £350,000, to UK buyers for three months before any overseas marketing can take place.
Thus reducing competition and making property acquisition easier for UK locals.
Starter Home Initiative
This is a government scheme that will see 200,000 new-build homes in England sold to first-time buyers with a 20% discount by 2020.
More information about this can be found on the Starter Homes website where you can register your interest as a first-time buyer.
Shared Ownership Scheme
Shared ownership homes are provided through a housing association and offer first-time buyers a share of the property ownership on their potential home.
Buyers can purchase a share of between 25% and 75%, and then pay rent on the remaining share, making this a more affordable option for those on a lower budget.
The shared ownership scheme is only open to first-time buyers, or those who previously owned a home but can’t afford one anymore.
The scheme is only open to those on salaries lower than £60,000 per year.
Find out what Hunter Finance has to say about obtaining a mortgage through an intermediary.
Committing to being a homeowner
There is often debate over when is the perfect time to get on the housing ladder, but with interest rates on mortgages consistently low and a reduction in available houses, it seems like now would be the perfect time for first-time buyers to invest.