Why is this the year of the first time buyer? Since the market crash, it has become more of a challenge to buy your first home. With 95% and 100% mortgages a thing of the past, larger deposits and stricter restrictions have made homeownership difficult. Add to that the continuously rising house prices and low-interest rates, it is no wonder that many gave up hope. A new report by The independent Social Market Foundation, claims ‘If ownership rates among 25 to 34-year-olds were the same as 15 years ago, an extra 1.8million of them would own their own homes in England.’ With all this in mind, why are the press and major industry bodies calling this the year of the first time buyer?
In The Rightmove House Price Index, released on the 15 February, Miles Shipside, Commercial Director of Rightmove stated; “For the second month running the highest increase in supply of homes coming to market is properties with two bedrooms or fewer, typically the target purchase of first-time buyers or buy-to-let investors…. More and more agents are reporting a healthy return in first-time buyer numbers, and with the cards increasingly stacked in their favour 2016 could prove to be the year of the first-time buyer.”
We agree with his comments, we too have seen an increase in the number of first-time buyers coming to the market this year.
Government initiatives such as Help To Buy are assisting first-time buyers to get their foot on the housing ladder. The Help to Buy: Mortgage Guarantee scheme is available for new and existing properties up to the value of £600,000 and works the same way as a typical mortgage. Due to this scheme, the approved mortgage lenders are able to offer high-loan-to-value mortgages, meaning once again you are able to buy a home with a 5 per cent mortgage.
If you are saving for a deposit you can also take advantage of the Help to Buy: ISA. If you are a couple buying a home, both of you are able to have an account which means you could receive up to £6000 towards your first home. This is because for every £200 you save in a Help to Buy: ISA you will receive a government bonus of £50 up to the maximum of £3000.
Where as low-interest rates are having a negative impact on other saving options, the interest rates are great news for your mortgage. With no sign of the interest rate increasing in the near future, you can look at securing a fixed rate deal at a low rate for a period of time. Mortgage lenders are also finding new ways to help
Mortgage lenders are also finding new ways to help first time buyers onto the ladder by creating schemes that allow families to pool their resources together. The buyers are still responsible for paying their mortgage each month, and as soon as the initial mortgage deal ends, the family members who assisted in the purchase are able to retain their savings and even withdrawal their cash.
The changes in stamp duty for buy-to-let landlords and second homeowners it is expected will start to have an impact on the rental market, with rents believed to start rising as of April when this change comes into effect. According to research by the Bank of Scotland, the average monthly rent is rising by £46 compared to a decrease of £9 in monthly costs for buying a home.
"Since 2009, average buying costs have consistently been lower than average renting costs. In the past year this gap has doubled to an annual saving of £1,440,” states Nicola Noble, mortgage director at Bank of Scotland. "This improvement in the costs of buying compared to renting over the past few years has helped to boost the number of first-time buyers, who now account for 46% of all home sales in 2015 - up from 35% in 2007. Official government schemes such as Help to Buy have also played a part in helping first-time buyers, as have improving economic conditions."
There is no doubt with more schemes to help you buy, lower interest rates and the rising rents, this year is the year of the first time buyer. If you are looking to buy your first home, do your research to see which scheme best suits your needs. Apartments are a great choice for your first property in Bath, if you are looking for an apartment come and speak to the specialists.