The rise of the first time buyer
For many years, it looked as though the first time buyer was a neglected group in the United Kingdom. With house prices rising and mortgage providers making it more difficult to obtain the funding required to buy a home, first time buyers were bemoaning a lack of opportunities to get on the property ladder.
Things have changed though and 2016 has seen the rise of the first time buyer. There are a number of reasons for this but there has been a concerted effort to provide support for the first time buyer and to hamper other buyers.
Additional support from parents
One leading lender has stated that the level of first time buyers in the UK rose by 10% in the opening six months of the year. When you consider this has come against the backdrop of rising property prices and the uncertainty over the EU Referendum, this is a positive state of affairs.
The same lender, a noted bank that provides mortgages across the country, believes that assistance from parents is the driving force behind many first time buyers moving on to the property market. The need for a sizable deposit is often a barrier to first time buyers but if parental assistance is available, this deposit can be raised in a simpler and easier manner.
While the economy is proving difficult for many people, there are people who are flourishing or who are reaping the benefits of more attractive marketplace when they were active. This has created a situation where many first time buyers are receiving financial support from their parents or family members to help them get started in life.
Recession led savings
Different people respond to recessions in different ways. A lot of people have been caught out by the recession, which has led to them suffering financial hardship. However, there were many people who heeded the signs of financial difficulty and who decided to save money instead.
Regular savings over the years, especially in the wake of the recession, has created the platform where many first time buyers have funds available to pay their deposit on a home. It isn’t possible to save for a deposit overnight but the people who took decisive action in the early days of the recession are now reaping the rewards.
Additional support for raising a deposit
The Government has been actively trying to support and encourage first time buyers. The Help To Buy ISA has boosted some people’s savings by 25%. Anyone who has been able to save a sum of £12,000 has found themselves in line for a £3,000 bonus, improving the amount of money that they have been able to use as a deposit.
Lower interest rates are of benefit to first time buyers
With the level of 0.5% interest rate having been in place for over 7 years in the UK, and this figure having been previously regarded as the record low, it has been possible for first time buyers to obtain a mortgage that is affordable. With an August 2016 cut taking the interest rate to 0.25%, there has been a further recent boost and there is debate about whether interest rates could fall further.
Depending on who you listen to, there could be negative interest rates in the United Kingdom very shortly. There are, however, some experts predicting that interest rates will have to rise in the near future. This means that it is impossible to say what will happen to interest rates in the foreseeable future, but at this present time, interest rates are at an attractive level for first time buyers.
The introduction of additional stamp duty charges
The Government has implemented a number of changes aimed at curbing the buy to let market in the United Kingdom, and this has had a knock-on positive effect for first time buyers. For many landlords and property investors, the introduction of a 3% stamp duty charge for people buying an additional property has caused many investors to question their position in the market. In a straight comparison, it costs less for a first time buyer to buy a property (valued at £40,000 or over), so it is easy to see why first time buyers have flourished of late.
If you are a first time buyer, the market hasn’t been as attractive or as appealing to your needs in a long time. While many experts believe the UK property market is in for a period of stability, there is no guarantee that all of the suitable conditions will remain as attractive for first time buyers as they are. Some experts are of the opinion that a rise in interest rates may occur soon, but this isn’t guaranteed. However, it is important to note that first time buyers have a strong opportunity at the moment to obtain a mortgage and buy a home, which makes this the ideal time for many first time buyers to take action.