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Helping first time buyers in a challenging market

15th October 2019

With the backdrop of a changing economic and political outlook, the UK mortgage market is holding up well and first time buyers appear to be succeeding against all the odds despite a number of obstacles being put in their way, including rising house prices.

The Office of National statistics has reported that the average house prices in the UK increased by 0.9% in the year to June 2019, with the average UK house price was £230,000. This is £2,000 higher than the same period the previous year, June 2018.*

There were 32,760 new first-time buyer mortgages completed in June 2019, which is 1.5 per cent fewer than in the same month in 2018, according to figures published by UK Finance.**

These figures suggest first time buyers are being squeezed slightly, but at the same time they are showing resilience in a challenging market for what can be the biggest financial commitment of their lives.

The fact they are buying homes in their tens of thousands every month shows there is still confidence in the housing market, that there’s a desire to purchase first homes and the overall economic landscape isn’t deterring many. First time buyers continue to find deposits for their mortgages, many are using Help to Buy*** and ultimately they are getting onto the housing ladder. The Bank of England interest rate is still low at just 0.75% and has been for some time helping to keep the overall cost of borrowing low for now, although that could change going forward into the New year.****

Rising house prices puts another potential obstacle in the way of first time buyers. Saving for a deposit and the associated costs of buying a home is a bigger challenge than ever for new buyers so providing products with 95% LTVs is a way of minimising this, particularly as house prices are on the up. At Leek United we continue to offer 95% LTV on purchases, including new build houses and flats, to help as much as possible.

Working closely with brokers and listening to their feedback and market observations, we’ve ensured we have products available to first time buyers that provide not only good rates but additional assistance too, with some products having a cashback and no valuation or application fee to help make it easier and more affordable as first time buyers start the journey towards owning their own home.

When needing quick and accurate decisions, brokers can use tools such as online affordability calculators to determine a buyer’s suitability for a mortgage taking into account their monthly income and anticipated expenditure at their new property.

On this point, making sure that every case is underwritten individually is important so that appropriate decisions can be made on the customer’s circumstances.

First time buyers are at the heart of the mortgage market and despite the challenges they have faced in recent years, and continue to face, lenders are committed to developing new products and criteria that provide choice for brokers to offer their customers a way into home ownership.

 

 

*https://www.ons.gov.uk/economy/inflationandpriceindices/bulletins/housepriceindex/june2019

**https://www.ukfinance.org.uk/data-and-research/data/mortgages/lending-trends

***https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/820479/Help_To_Buy_Equity_Loan_statistical_release_Q1_2019.pdf

****https://www.bankofengland.co.uk/-/media/boe/files/inflation-report/2019/august/inflation-report-august-2019.pdf

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