Low Numbers of First Time Buyers are Planning to Buy Property.

by Mark Johnston

Low Numbers of  First Time Buyers are Planning to Buy Property.

Recent figures show that the typical first time buyer is looking to spend around £150,000, but the number of homes on the market in this bracket has dropped by 5 per cent since last year.

Researchers suggested that the drop is due to a reluctance of people who could be looking to make their second step on the property ladder to put their home on the market.

Also raising a deposit remains the biggest concern for people trying to get on the property ladder. According to a recent survey 36 per cent of people say that this is their main hurdle.

Only a quarter of people planning to buy a home next year will be a first time buyer, this figure is still well below the levels needed for a “healthy” market, according to a survey conducted by property search website Rightmove.

It was hardly surprising that many frustrated first time buyers will try to get on the property ladder next year with a deposit of less than 10 per cent, as two fifths of those with a deposit of at least 10 per cent said they have been saving for five years or more.

There have however been some signs recently that the choice for people with lower deposits is improving, with the Co-operative Bank and Chelsea Building Society both launching some market leading high loan to value deals.

The Co-operative Bank has launched a two-year fixed rate mortgage at a rate of 3.99 per cent with no set up fees.according to some experts the Co-operative Bank’s low rate will be particularly welcome, as it is worth bearing in mind the average rate on offer for mortgages of this type for people with a 10 per cent deposit is 5.30 per cent.

The next lowest rate deal of this kind on its tables is one from the Chelsea Building Society at 4.19 per cent and is also a 2 year fixed deal which is only available in branch, but this does carry a high fee of £1,495.

James Hillon, head of mortgages at the Co-operative Bank, said: “We welcome the Funding for Lending scheme as a route to boosting the housing market and the wider economy, but believe this goal will only be achieved by increasing the availability of mortgages to first-time buyers rather than just focusing on remortgage customers.”

A spokeswoman for comparison website Moneyfacts said the fee free aspect of the Co-op mortgage would make it particularly attractive. Many borrowers often have to stump up hefty fees before they have even made their first repayment.

Which?, the consumer magazine, executive director Richard Lloyd said: “Today’s news that the Co-operative Bank is to pass on this cheap finance to those struggling to get on the housing ladder is welcome as we want to see more banks follow their lead and pass on lower borrowing costs to all borrowers, not just those with bigger deposits or equity in their homes.”


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