There is no denying COVID-19 will impact the entire housing market, and all buyers should take time to evaluate their finances and whether buying a house is right for them. However, there are genuine concerns that young house buyers will struggle to step on the property ladder. There are reasons why this group of buyers will be more affected than others, but there are potential solutions which should help this group be active in the market.
With Chancellor Rishi Sunak suggesting we are heading for a severe recession on a scale “we have not seen”, many people will be looking to stabilise their finances and try to minimise any negative impact. For many people, the thought of committing to a house purchase is not a priority right now.
However, during a recent webinar survey, 94% of first-time buyer respondents informed Rightmove they intend to buy a home as soon as they can. This is positive news. While not all of these prospective buyers will manage to buy a house soon, it is cheering to see so many people are intent on progressing with their house plans.
Interest rates offer support and pose challenges
With interest rates at 0.1%, a historic low, there is an argument that mortgages are affordable for many people. However, in order to arrange a mortgage, most people need to have savings, and low-interest rates hamper savings.
Prospective buyers who have significant savings already will hopefully be in a position to arrange an attractive mortgage. However, many youngsters who are in the process of saving their deposit might need to save for longer.
Also, right now, there are fewer mortgage products on offer from the leading lenders. This will change, but for many reasons, lenders pared back the mortgage products they offered during the lockdown.
With a reduced workforce, and increased demand for re-mortgaging options, and mortgage payment holidays, many lenders removed a range of mortgages from the marketplace. Unfortunately for many youngsters, the remove mortgages were commonly the 90% and 95% loan-to-value products that are often suitable for first-time buyers.
Some people have taken findings from Trussle, an online mortgage broker, saying first-time buyer mortgage applications fell 35% in April, on year on year figures. There will be some who worry about this, but given everything that is going on, many will view it as a blip that will be rectified as the market moves forward.
Knight Frank Finance predicts there will be a reduction of 150,000 in first-time buyer mortgages issued in England and Wales this year. This is perhaps a more concerning prediction, and it is a platform for offering further support to first-time buyers.
There are ways to help first-time buyers
Some of the suggestions to support first-time buyers include:
- Extending the Help To Buy scheme
- Review the stamp duty threshold for first-time buyers
- Direct more buyers towards the Share To Buy portal
The Share To Buy portal, which specialises in Help To Buy homes and shared ownership, experienced its best day for registrations on May 13th. This was the day the housing market re-opened, and the figure was a 55% increase on the daily average for the year so far.
All house buyers face challenges moving forward, and many first-time buyers will struggle to step on the market. However, there is an apparent will to buy property, and there is scope for support. Therefore, there are many reasons to be optimistic about what the market has to offer.
Currently, in line with Government guidelines, our Letchworth Garden City branch has reopened and is again staffed with sales and lettings personnel. To clients old and new, if you have any queries or need advice on property sales and lettings then please call 01462 481100 or email firstname.lastname@example.org.