How first-time buyers are bearing the brunt of mortgage uncertainty
Product choice is recovering, but first-time buyers are still bearing the brunt. Here’s what the latest data shows.
Buying a home is fraught with uncertainty and quite a bit of stress as you try to keep control of everything that needs to happen. Whether it’s finding the deposit, getting a survey to establish the condition of the property, lining up a conveyancing solicitor, or looking for a reputable removals firm, it can all feel a little overwhelming at times.
And it can feel almost overpowering if you are a first-time buyer — not only do you have to contend with everything that needs to be done, but you’re doing it for the first time, stepping into the unknown.
What’s happening in the mortgage market
What hasn’t helped is the impact of the geopolitical issues — primarily the war in the Middle East — which has had an unexpected impact on inflation and therefore the interest rates set for the future, what is available to borrowers, and at what rate.
According to Rachel Springall, finance expert at mortgage comparison experts Moneyfacts, this situation can force lenders to hike rates on existing products, or to pull those mortgage products from the market earlier than originally intended.
There are signs of this position easing, but even though around 583 deals have returned to the market, this is less than half of what was removed between March and April. Specifically for first-time buyers, there are far fewer products offered at 90% and 95% LTV — the higher loan-to-value tiers that this group of buyers depends on most.
The pressure on first-time buyers
The problem is that, with house prices increasing at a faster rate than disposable income, it becomes increasingly difficult to find that all-important deposit — especially since first-time buyers don’t have the luxury of using accrued equity from a property they are selling. This makes higher LTV products, which require a far lower deposit, much more attractive, and their removal from the market hits first-time buyers hardest.
As Rachel Springall notes:
“It is understandable to see why affordability for borrowers continues to be stretched.
“Incomes are not stretching far enough to acquire a mortgage and those trapped in the rental cycle struggle to build a sizeable deposit.
“As may be obvious, securing a mortgage can be more of a challenge for those going alone, which means any relaxation to loan-to-income rules, such as with building societies like Nationwide with its Helping Hand mortgage at six times’ income, can make all the difference.
“Support and innovation from lenders will be vital to keep the market moving.”
What can help
There is help available that can take some of the stress out of the homebuying process. Talking to a mortgage broker can help identify the best product for your needs, as they will have all the latest deals available on the mortgage market.
Appointing a solicitor is a necessity when buying a home, and finding a value-for-money firm that provides a focused, quality service does not mean compromising on either. Best Value Conveyancing will assign you to one of our solicitors to look after the legal aspects of your move, keeping the process moving without cutting corners. All our quotes are fixed prices, and we tell you the cost of standard disbursements upfront.
We also offer a no completion, no fee guarantee should your sale or purchase fall through, even if you are gazumped.
Call us on 0800 0387 007 to get your transaction moving, or use our quick quote tool for an instant figure.
