As statistics show increase
It has previously been a bleak picture for first-time buyers and the message “out there” appears to be that the level of opportunities for first-time buyers is declining. So, it is promising that the Office for National Statistics (ONS) reveals that the % volume of first-time buyer mortgages, from borrowers between 25 and 34, has in fact slowly been rising, since 2010.
The hurdles for first time buyers
The hurdles still apply for first time buyers:
- Difficulty in saving an adequate deposit
- Lack of interest-only mortgages available, as an affordable first step
- Lack of affordable housing
- Higher interest on property with low equity levels
- Rise in house prices in general
In addition, salary multiples can play a part.
KPMG reported earlier this year that the average salary required by a first time buyer was £41,000, reaching as high as £70,000 in London.
There are possibilities for first time buyers
The official statistics from ONS show that over 41% of mortgages are taken by first time buyers, compared to just under 40% in 2007, before the financial crash.
In addition, borrowers averaged 37 in age in 2014, compared to 39 in 2010.
Chart – provided by Highcharts
Deposits as a % of property price
Due to rising house prices, the value of deposits as a % of house price has dropped, by c6% between 2010 and 2014.
Chart – provided by Highcharts
Help to Buy Scheme
The Help to Buy Scheme will add to part of the reason for the survival of the first-time-buyer, as with just a 5% cash deposit, first-time buyers can potentially get onto the property ladder.
However, whilst Help to Buy does “help” first time buyers, the argument stands that what would really help is more affordable housing, rather than just assistance with gaining higher levels of debt.
Dental & Medical Financial Services help first-time buyers to get onto the ladder with the best rates possible. Call to speak to Chris, specialist mortgage adviser.
Tel: 01403 780 770