Recent research from Moneysupermarket.com has claimed that millions of people in the UK do not plan to ever buy a property. Indeed, with the average age of first time buyers being 37 this is hardly surprising!
The number of mortgage products available for first time buyers has dropped by 187 to just 1,337 over the last year. This is a massive decrease from the 14,940 available in July 2007. To further rub salt in the wound the average loan to value (LVT) is 78%. What this means is that for a £150,000 house a first time buyer would need to have a whopping £33,000 deposit! Well beyond the means of most buyers.
However, there is some good news for those trying to get a foot on the property ladder. This year there are 20% more products available for those with a 10% deposit. There are currently 209 products available, with the average interest rates for these mortgages having dropped by 1.14% since April 2009. But, the best rates are still reserved for those with the biggest mortgage.
Home ownership has always been important in the UK, which is why Clare Francis from Moneysupermarket is surprised at the number of people who no longer plan to buy their own home. Francis acknowledges that this is because, “property prices remain exceptionally high [and] mortgages remain hard to come by with the number of loans available to those with a small deposit well down on the pre-credit crunch days.”
One positive of stagnant house prices is that first time buyers are able to save for their deposit without the worry of house prices increasing disproportionately (excluding London). Many first time buyers are using this lull in the market to get a more substantial deposit together with the aim of reducing their overall mortgage repayments in the future.
At In-Deed Conveyancing we have also seen a gradual change in attitudes of prospective first time buyers. Whilst some are discarding home ownership completely, many young people are starting to save for their deposits up to a decade before they’d like to own their first home. This forward thinking means that saving such a substantial housing deposit becomes a far more manageable task.
Those with smaller deposits are also making the most of various government schemes to get onto the property ladder. Up until the 24th March 2012 there was a stamp duty holiday where first time buyers were exempt from paying stamp duty on properties up to £250,000, saving thousands of pounds.
The government’s latest idea is to encourage buyers to purchase property under their “New Buy” scheme. This includes all buyers looking to purchase a new build property beneath £500,000 but only have a deposit between 5-10%. The lenders involved then provide a 90-95% loan-to-value mortgage for buyers who meet their qualifying criteria. To find out more please visit: https://www.homebuyservice.co.uk/homebuy-options/newbuy-scheme.html
If you are a first time buyer and looking to buy your first home please give In-Deed a call. We can informally explain the legal side of the house process and provide you with a comprehensive conveyancing quote to help you budget for your move. Please email us at [email protected], call 0330 100 2322 or retrieve an instant conveyancing quote from our website (www.in-deed.net).