Time for 1st time buyers to re-enter the market
Hope for first time buyers
8 December, 2009
The number of mortgage products available for first time buyers is at its highest since May this year, with 1,354 products now available.
This is an increase of 18.3% since August when products were at their lowest levels.
It is encouraging to see an increase in lenders providing suitable options for first time buyers, as the number of products in this arena have been low for some time. If lenders continue to give a helping hand to first time borrowers we could see a significant improvement in the housing market.
However, to turn this glimmer of hope into reality for first time buyers, the Government should announce an extension on stamp duty exemption for properties under £175,000 in Wednesday's Pre Budget Report. Even better, the Government could go one step further and raise the benchmark to £250,000, as recently suggested by the Conservatives.
Potential first time buyers would be better off buying a property than continuing to rent according to new research from the Abbey.
Abbey found that:
- £1 billion could be saved by buying now
- Buying is cheaper in every region except London
- Average rent outside London is £434 per month
- Average mortgage is £382 per month
The only exception to this is those looking to buy in London who would pay more in order to buy a home (including purchase price and mortgage repayments) than to rent.
According to the bank's research 1.61 million Britons said that they were looking to buy in areas of the country other than London and based on today's prices these people would save £624 each or a collective £1 billion over the next 12 months by doing so.
For this group, the average monthly rent comes to £434, while those buying a property with a 25 per cent deposit would currently see a monthly mortgage bill of £382, an average saving of £52 per month.
Meanwhile, for the 187,000 people looking to get on the property ladder in London, continued high prices in the capital mean that these people will £466.19 worse off each month if they choose to buy as opposed to renting.
Across the country, the research into typical first time buyer flats and terraced properties found that in the last 12 months, average prices have decreased by 9 per cent in the to £92,861. This means a first time buyer will need an average deposit of £23,215 if they want to buy a property with a 25 per cent deposit.
Prospective buyers in Wales are set to make the biggest monthly saving at £90.91, followed by those in the North West £87.43 and Yorkshire £77.06. Buyers in East Anglia will see only a marginal saving of £2.59 each month.
Nici Audhlam-Gardiner, Director of Abbey Mortgages, commented:
“Our latest research shows there is hope for first time buyers trying to buy their first home. It's now cheaper in all bar one of the regions to buy rather than rent and shows that saving for that all important deposit is so worthwhile too.