Over the last few years, home ownership has felt like it has become further out of reach for many first-time home buyers. With rising home prices, a shrinking number of properties on the market, high interest rates making mortgages a challenge, and ever-increasing competition. The housing market can seem like an unfair game. Recent property market reports suggest that the housing game may be shifting, and with the introduction of new mortgage products, offering more opportunities than ever before. Is the housing game changing for first-time buyers?
The current state of the housing market
In the current slow property market, home buyers are doing everything they can to knock down house prices. It's not all bad news for the housing market. According to the Nationwide Building Society, house prices reversed seven months of falls and rose by 0.5% in April. Although this isn't a huge jump, it's a sign that the market is starting to stabilise.
Kim Kinnaird, Director, Halifax Mortgages, said: ‘The economy has proven to be resilient, with a robust labour market and consumer price inflation predicted to decelerate sharply in the coming months. Mortgage rates are now stabilising, and though they remain well above the average of recent years, this gives important certainty to would-be buyers. While the housing market as a whole remains subdued, the number of properties for sale is also slowly increasing, as sellers adapt to market conditions.’
The new 100% mortgages
A revolutionary development in the UK housing market is the launch of Skipton's new 100% mortgage, exclusively for renters. This mortgage is designed to help first-time buyers get onto the property ladder without having to put down a deposit. However, this kind of mortgage has also been compared with the risky loans that led to the financial crash in 2007–8.
The good news is that the mortgage has been structured in a way that addresses some of the risks. According to David Hollingworth, associate director at the broker firm L&C Mortgages, ‘It offers a measured approach that gives credit for the fact that many tenants will have built up a strong track record of managing their housing costs responsibly.’
This means that the new 100% mortgage takes into account factors like rent payment history and affordability. For example, Skipton will assess applicants based on whether they have paid rent on time for at least 12 months. They will also assess affordability by taking into account factors like income and outgoings.
The launch of Skipton's 100% mortgage is a game-changer for first-time buyers. It provides an opportunity for renters to get onto the property ladder without having to save up for a deposit. Only time will tell whether this mortgage will become a popular choice for first-time buyers, but it certainly represents a new era in the housing game.
The new reality for first-time buyers
Another aspect to consider is the competition from other buyers in the market. With more people potentially able to access these 100% mortgages, it could lead to higher demand and subsequently higher prices, which could put first-time buyers at a disadvantage. It's also worth noting that the demand for homes may still outweigh the supply, so there may be limited options for first-time buyers in certain areas.
Finally, there is the issue of affordability. While the new 100% mortgages and other schemes may offer more opportunities for first-time buyers, the reality is that property prices are still very high in some areas. In some cases, it may still be difficult for first-time buyers to get on the property ladder, even with these new options.
What this means for the future
Another aspect to consider is the competition from other buyers in the market. With more people potentially able to access these 100% mortgages, demand for homes may still outweigh the supply, so there may be limited options for first-time buyers in certain areas. Ensuring you are in the best position to proceed when viewing properties is essential.
Speaking to local estate agents like Deakin-White can give you a clear sense of the property market and also what the benefits are of registering with them. Often you will be informed of new homes for sale before they are actively marketed, giving you a head start on your search. Bear in mind to check the terms of the mortgage you have been offered in principle so you know you are within the right price bracket. In addition, your mortgage may not be able to be used on a new build property or have other such limitations.
To discover more about the benefits of registering with Deakin-White for buying your first home in contact our team today.