04 Aug, 2023/ by Homeward Legal /Buyer, First Time Buyer
Picture a suitable candidate to fit the term ‘first-time buyer', and more than likely you'll have imagined a twenty-something who is trying to flee the parental nest, or a young couple who have just got married or are planning to co-habit. (The imagination may have been skewed by the picture chosen to accompany this article, of course!)
While the proportion of those looking to buy their first home may well be categorised in that way, the truth is that the group of ‘first-time buyers' can encompass anyone, including those who have unfortunately come out of a relationship and need to set up on their own, or are trying to flee the relative constraints and cost of renting, or perhaps they simply want to buy a property to serve as part of their pension planning.
Whatever the reason, being a first-time buyer (or the abbreviation FTB as the property industry jargon likes to use) has become tougher than ever.
The cost-of-living crisis, precipitated by the confluence of a number of factors including rising energy prices, inert inflation rates for the most part, governmental financial handling and several other causes, really haven't helped the prospective first-time buyer.
There is also the conundrum of mortgage rates and rent costs.
On the one hand, as the Bank of England fights to control inflation by raising the base rate (currently 5% as of 22 June 2023), mortgage lenders have increased their rates at which they are willing to lend to prospective buyers. This in turn makes the idea of buying a property increasingly unpalatable, particularly where the budget for such a massive project is constrained.
But, as the current national financial status makes the idea of purchasing a new home increasingly inviable for first-time buyers, they have to live somewhere. And, if they are not renting already, becoming a tenant is really the only alternative.
However, since several potential first-time buyers are turning away from purchasing their own home and are turning towards looking for somewhere to rent, the extra demand has its own problems as the demand for renting outstrips the availability of suitable places. This is not helped by the number of landlords who are now selling up adding to the stretched supply of rental properties.
Taking the leap
Past history tells us that such problematic times are very unlikely to last forever, and that inflation, and therefore interest rates and the impact on mortgages, will eventually fall, creating some sort of equilibrium in the property market.
However, the flipside of this is that property prices, while possibly falling at some point, won't fall far and are likely to increase further (making for a great investment, of course, but limiting the choice of new homes for the first-time buyer).
As can be seen in the table produced by Halifax for its monthly House Price Index (this example for June 2023 data), which uses a base of January 1992 to monitor the rise in house prices over time, it can be seen that in just over thirty years, the average house price has risen five-fold.
This is shocking news for first-time buyers but there are options including taking out a 35-year mortgage. Such a route does mean that the first-time buyer will be constrained by their age (can the mortgage company take a risk that the borrower is likely to fulfil the repayments over their lifetime?), and the payments, while potentially lower each month, will be more over the period of borrowing because of the accrued interest.
Some first-time buyers may be lucky enough to look to relatives (the famed Bank of Mum and Dad, or a willing lender taking out their own home's equity to help).
All of which makes the idea of buying a property for the first time incredibly daunting.
Assuming the plunge to go ahead has been taken, and you're the plucky first-time buyer, you'll want to minimize the cost of the process as much as possible.
And that's where Homeward Legal can really help with affordable but quality conveyancing services!
Homeward Legal will provide a quote that will not change - what you are quoted is what you pay (there are some unforeseen items that might arise during the purchase and/or sale, but the solicitor discusses these and their cost as they come up).
In addition, to protect the homebuyer further, Homeward Legal operates a ‘no completion, no fee' promise, which ensures that, should the purchase or sale not go through as planned to completion status, no payment is required.
Call to get your conveyancing quote started, or to discuss your concerns with your plans to move.
Or you can get a quick quote, using Homeward Legal's easy-to-use quote generator.