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First time buyers increased in the UK in March and paid less for their home
The number of first time buyers in the UK increased in March to a total of 32,500, the highest figure since June 2014, according to the latest tracker report. Overall first time buyer volumes grew by 47.7% on a monthly basis and as well as cheaper prices the burden of deposit costs and mortgage payments dipped, the data from the Your Move and Reeds Rains report shows. This means that, between February and March, the total flow of buyers managing to step foot on the ladder for the first time grew by 10,500 and on an annual basis, the total number of first time buyers in March grew by 34.9% compared to March 2015. Adrian Gill, director of estate agents Your Move and Reeds Rains, pointed out that while much was made of March being the month of the buy to let landlord and the second home buyer due to the April deadline for additional stamp duty, the surge was not at the expense of the bottom rungs of the ladder. He believes that a continuation of the broadly positive economic climate has likely been a factor spurring would-be first time buyers. ‘However, what’s really getting those numbers up is the fact that the range of support options available to first time buyers is at last beginning to be recognised and utilised,’ he said. ‘The Help to Buy scheme is assisting those with limited capital recognise their dreams, while the Government’s offer of cut price homes for first time buyers is easing supply in a part of the market that typically struggles to match roaring demand with constrained supply,’ he added. The data also shows that March has seen a lightening of home ownership costs and the charges associated with it. The average purchase price paid by first time buyers in March stood at £166,559, down 1.2% in absolute terms compared with February which previously marked the highest average price on record. But on an annual basis, the average purchase value of a first time buyer property rose by 9.2%. Deposit and monthly mortgage payment costs also declined. First time buyer deposits averaged £28,233 in March, down 4.1% compared with the previous month. In addition, the proportion of an average first time buyer’s monthly income that is consumed by deposit costs fell 3.1% between February and March from 74.9% to 71.8%. Meanwhile, over the same period, monthly mortgage payments accounted for a steadily decreasing amount of average first time buyer income, falling from 20.4% of monthly income in February to 20.3% as of March. Besides the falling costs of home ownership, lending conditions for firs time buyers have remained favourable. The average loan to value (LTV) ratio reached 83% in March, marking a 0.5% uptick on the previous month, meaning first time buyers will be able to borrow more against the value of the home they wish to purchase. The average first time buyer mortgage rate continues to fall, dropping from 3.14% in February to… Continue reading
Many first time buyers in UK expect to be paying for mortgage into retirement
A third of young people in the UK expect to still be paying a mortgage beyond age 60 with over half worried that they would not be able to afford the payments when retired, new research shows. Rising house prices are an increasing concern to people trying to get on the housing ladder but many are still determined to own their home, according to the latest annual Generation Rent Report from lender the Halifax. Overall some 34% expect to work beyond retirement age to pay off their mortgage, 44% are worried that they won’t be able to afford their mortgage payments in retirement and 51% are worried that paying their mortgage will hamper their ability to save for retirement. Despite this, the report reveals that home ownership aspirations remain as strong as ever and that those late to the ladder are taking a range of measures to ease the financial burden. Indeed, the numbers of first-time buyers have recovered strongly in recent years, with 300,000 taking the first steps onto the property ladder in 2015. The average age of a first time buyer is now 30.4 years, nine months older than in 2010. Some 49% of aspiring first time buyers believe that buying with a partner is the most likely measure to consider to make owning a home more affordable while 34% say it is extending a mortgage beyond 25 years. In 2007 the proportion of first time buyers taking up a 35 year mortgage stood at 16%. By 2015 this figure had grown to 26% and over the same period, the share of mortgages with a 20 to 25 year term dropped from 48% to 30%. As well as 34% expecting to still be paying a mortgage aged 60, some 6% still expect to be paying their mortgage over the age of 70, while 8% expect to be paying their mortgage throughout their life. Only 46% believe they will be mortgage free before they retire, falling to 30% of non-home owners. The research also shows that 34% expect to work beyond retirement age to clear their mortgage and while for current owners this is 28%, for those not yet on the housing ladder 39% believe they will be working later in life. Some 44% are worried that they won’t be able to afford their mortgage payments in retirement and 45% are worried that the cost of their mortgage will mean they have to work longer while 51% are worried that paying their mortgage will hamper their ability to save for retirement. ‘Despite the barriers and the understandable concerns, it’s very positive to see that younger generations are still striving to get onto the housing ladder, with more than 300,000 taking that first step in 2015,’ said Craig McKinlay, mortgages director at the Halifax. ‘This recovery has been fuelled by a number of factors, including an abundance of successful Government initiatives and the affordability of monthly mortgage repayments due to the continuing low interest rate environment… Continue reading
Research shows US first time buyers battling against less choice and higher prices
First time buyers in the United States are facing a lack of affordable homes to buy and higher prices, according to new research. Home values are rising the fastest among entry-level homes in more than half of the largest housing markets, according to latest real estate market report from Zillow which covers the first quarter of 2016. It says that rising home values in this segment of the market can be attributed to a lack of supply, with 10% fewer homes for sale this year compared to last. The median value of entry level homes, that is those in the bottom third of the market, have increased the most over the past year in Denver, up 20%, followed by Portland and Dallas. The report also shows that there are 13% fewer entry level homes available in Denver than there were a year ago. The number of entry level homes available declined the most in Portland where there are 40% fewer entry level homes available than there were a year ago. The findings signal difficult times ahead for first time buyers looking to enter the market. Going into home shopping season this spring, buyers will find fewer homes in the bottom and middle of the market which are the properties most affordable for first time buyers. The trend also highlights the different experiences buyers are having in the recovering housing market. Buyers looking for the most expensive homes will find slower price growth, a larger selection, and less competition this spring than entry level buyers who are likely to face stiff competition, bidding wars, and very few homes to choose from. ‘It's going to be a tough home buying market this spring, especially for first time buyers or even people looking to move up into a slightly more expensive home,’ said Zillow chief economist Svenja Gudell. ‘In order to stand out in a competitive market, buyers should get pre-approved for a loan, find an agent who has experience with bidding wars, and consider coming in at the asking price, so the seller knows they're serious,’ she added. In all of the largest US housing markets, more than a third of the homes available for sale are in the most expensive segment in the top third of the overall housing stock in the market. In nine markets, top tier homes make up more than half of the inventory. The most expensive homes on the market are more likely to have a price cut, a signal that there's less demand for top tier homes. The share of top tier listings with a price cut has increased 1.6% over the past year. Continue reading
