Good news for first-time home buyers

Many doctors and dentists may believe your dreams of buying your first home are slipping out of reach due to much uncertainty surrounding the mortgage market and the economy. Please don’t despair – we have ideas and strategies guaranteed to calm your concerns and show that high street lenders are still willing to lend to first-time buyers, setting you firmly on your journey up the property ladder.Reasons not to give up on buying your first home.

Following the infamous mini-budget back in September and the subsequent hike in interest rates, there has been a significant slowdown in demand for house purchases, particularly among first-time buyers. The London Post1 reported that demand among first-time buyers was down 26% in October, with many pausing for thought based on the soaring borrowing costs for buying that dream first property. 

4 reasons NOT to give up on buying your first home

1. Economic stability

There are indications that some level of economic stability may be returning. Recently we have seen some lenders reduce interest rates as early signs of calmer waters are returning from the chaos that ensued at the back end of September.

2. Stamp duty relief

We must remember that some good did come out of the mini-budget. Stamp duty relief for first-time buyers was increased up to £425,000, meaning no stamp duty fees will be due up to this figure, while the maximum value of a property on which first-time buyers relief can be claimed also increased from £500,000 to £625,000. The Chancellor’s statement on 17th November 2022 confirmed these cuts will remain in place until 31st March 2025.

3. Loan-to-value mortgages

You will become accustomed to the term ‘loan-to-value’ once you start researching mortgages.This phrase refers to the split between the amount you borrow and the deposit you have. Typically, the higher the loan-to-value you require, the higher the interest rate you will pay – so the less cash you contribute, the more you will borrow. First-time buyers often have as little as a 5% deposit. Unlike previous economically turbulent times, high loan-to-value mortgages have not been withdrawn. These products continue to be available to first-time buyers with many high-street lenders. It is worth noting there are still options out there for those looking to take their first steps onto the property ladder, offering more reasonable rates than you might think.

4. Lower demand – reduced house prices

The property market is showing signs that due to lower demand, some sellers are looking to reduce their asking prices, with Savills2 expecting prices to fall by an average of 10% in 2023. If this does transpire, people will need to borrow less to fund their purchases. Hence, helping those first-time buyers to achieve their dream properties. If house prices do fall, demand could slowly pick up again as we move into 2023 – although, as always with financial forecasts, this cannot be guaranteed!

To summarise…

Ultimately, if you do find your dream house, and have the deposit and affordability to pursue that property, mortgage products remain available to explore. 

If you would like to discuss mortgage options available in this present climate, then please contact one of our mortgage advisers. We can assess the possibilities from across the market and secure the best deal available to you.  

Always remember your home may be repossessed if you do not keep up repayments on your mortgage.

Have you paused the search for your first property? Let us know by leaving a comment below

1 The London Post – First-time buyer demand falls by 26% in October

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