THE PROPERTY EXPERT
Do you remember the first time? IN a rare occurrence, the government policies that were intended to favour first time buyers over landlords have started to have the desired effect. The less said about the unintended consequences and negative side effects for landlords and investors the better, but that’s a different story! The government declared their intent to bring more first time buyers to market and to give those renting a route out of the rental market and into home ownership, and June’s figures show the impact of this.
First time lending was up 28% compared to May, and 25% compared to June of last year, which is welcome news. The Help to Buy ISA will be a continued resource that should give a slight boost for those saving for that all important and elusive deposit. The figures also reflect that mortgage lenders are keen to deal with first time buyers, for whom this has not always been the case, but since buyto- let mortgages now attract less favourable rates we may see more products aimed directly at first time buyers come to the forefront.
The interest rate cut will have a notable impact for those who have a variable rate, on average saving £22 per month. Having said this, there are some very attractive longer term fixed rate mortgages coming to market which should be considered very carefully. Not only are there savings to be had in arrangement fees and broker fees, but it is possible to get 5 year fixes at less than 2%, and 10 year fixes at less than 3%. Many variable trackers will offer lower initial rates but subsequently revert to a higher rate, or incur a rearrangement fee to take advantage of lower rates. The other options include lifetime trackers, but rely on the presumption that interest rates will continue to remain at these historic lows, which the Bank of England have said they do intend to rise rates to 2.5%, though it is not at all clear when this might be.
The current market is a perfect storm for first time buyers who are able to take advantage of these historic mortgage deals, help to buy schemes and a period in the market post Brexit where prices have taken a slight breath before they look set to rise again. CLIVE EDWARDS 01895 252000;clive.edwards@cameron-group.co.uk; www.cameron-group.co.uk