First-Time Buyer Rates
First-time buyer rates are often used as an indicator of the health of the property market, as a whole. This is not entirely unfair as, in order to fuel the property market, overall, it is essential that there are new entrants to the market. In general, these new entrants are first-time buyers. Increasingly, however, new entrants tend to be second home buyers who are, in the main, buying at the lower end of the market which is aimed at offering the second property to renters.
Traditionally, first-time buyers had a reasonably easy time of it, with a series of excellent offers such as free fees and discounted rates. However, with rapid rise in house prices between 2000 and 2006, many first-time buyers were squeezed out of the property market. Even with financial institutions previously offering first-time buyer mortgages of up to five times their salary, it became increasingly difficult for them to get a foot on the property ladder.
Credit Crunch & First-Time Buyer Mortgage market
The credit crunch has had a significant impact on the first-time buyer mortgage market. With the market changing so dramatically, the requirements of first-time buyer mortgage offerings have also had to change to reflect the new realities. Mortgages of greater than 90 percent loan-to-value have virtually disappeared and multiples of three times a borrower’s annual salary have again become the norm for mortgages. On the plus side, both mortgage rates and property prices have started to fall, potentially bringing more homes within reach of first-time buyers.
In general, first-time buyers are currently waiting longer before they enter the property market in a bid to reduce the value of the mortgage necessary, by saving towards a larger deposit. With UK mortgage providers tightening lending criteria it is important that first-time buyers get their finances in order before they embark on their first purchase.
Try To Avoid Negative Equity
Concern exists amongst many first-time buyers that the property market may not yet have bottomed out and that house prices could crash further, in the near future. The debates on this subject appear never ending and it is up to the individual purchasers to decide on the merits of the arguments. Unsurprisingly, first-time buyers are keen to avoid the possibility of getting into a negative equity situation and so have not been rushing back into the property market in great numbers.
Be sure to calculate the figures applicable to your property with our free online mortgage calculator