"It's very common to find a client who is on £30k doing crazy overtime wanting to purchase a £300k property"
Marthar Mutinda Scott (pictured), managing director of Mortgage Spot, has seen the changing trends in Edinburgh's competitive property market - particularly watching the nuances between first-time buyers compared to seasoned homeowners play out over the past few months.
She explained how interest rates and government programs have reshaped buyer activity, especially for those seeking their first home.
“There is an appetite right now to get back on the property ladder,” she said, citing recent reductions in interest rates. The fluctuation in rates, from “ridiculously low” during the pandemic to sharp increases in 2022, significantly impacted purchasing patterns, leaving first-time buyers hesitant while opening opportunities for investors.
Supporting Black and African mortgage clients
For Scott, her success lies in her diverse client base, with an emphasis on supporting Black and African communities in Edinburgh.
“The majority of my African clients express a desire to engage with a familiar face, someone they feel is cheering them on,” she told Mortgage Introducer, attributing this to her strong community outreach efforts. Her commitment to helping African-descent clients access homeownership is evident in her focus on financial literacy and realistic property goals, acknowledging the additional challenges Black clients often face in navigating the property ladder in the UK. These hurdles are both financial and systemic, including credit restrictions and cultural expectations that can complicate purchasing decisions.
“It is very common to find a client who is on 30k doing crazy overtime wanting to purchase a 300k property that greatly supersedes their income multiples threshold,” she explained, adding that it’s often necessary to clarify affordability to prevent disappointment.
The discontinuation of government support schemes, such as the First Home Fund and the Scottish LIFT Scheme added to the challenges, particularly for first-time buyers. According to Scott, when these initiatives were in place, they provided essential assistance, like a deposit contribution of up to 40%, which empowered many to purchase their first homes. But with their removal, many clients are uncertain if they can achieve their homeownership goals.
“With the discontinuation of the government schemes, coupled with the interest rate rises, there wasn’t much activity from first time buyers...so I was getting a lot of activity from the buy-to-let side,” Scott remarked. Buy-to-let investors seized the opportunity to buy properties at fixed prices without the intense competition typical in previous years, viewing it as a better trade-off than paying high premiums over home report values.
Today, a shift back toward first-time buyers is apparent, though high-interest rates continue to exert pressure on both affordability and expectations. First-time buyers, for instance, are now more likely to consider properties on the outskirts of town to find lower price points. Scott noted that they’re often bringing “5% or 10% deposits”, which translates to higher loan-to-value ratios and, subsequently, higher interest rates. Fixed-rate mortgages are popular in this group, offering some stability amid the market’s unpredictability, whereas more experienced investors prefer tracker mortgages, valuing the flexibility to move quickly as rates change.
Another critical area of Scott’s focus is educating clients about shared equity and new-build mortgages, which can be complex yet promising. She describes the benefits of new builds, which don’t require over-bidding and come with warranties and builder incentives. Yet, these options are often out of reach for first-time buyers, whose budgets rarely stretch to the £290,000 and above price tags that these properties typically command.
“The typical first-time buyer would not be able to get that kind of property,” Scott explained, a reality pushing many to buy older, ex-rental properties that often need significant improvements. Green mortgages, a recent introduction, incentivize buyers to choose energy-efficient properties, but they also result in older, less efficient rental properties being “dumped on the market”, often to first-time buyers who may be unprepared for the associated costs of retrofitting.
Economic uncertainty has also influenced client behaviour, with many now seeking stability through comprehensive insurance products, such as income protection and life insurance. This is a departure from prior trends, where many, particularly within African communities, were hesitant to consider life insurance due to cultural sensitivities around discussing death. Now, however, Scott said there’s a growing acknowledgment of the need for protection against unforeseen events.
“There are more conversations happening about making realistic financial plans,” she added, as clients express concern about covering expenses for dependents and avoiding reliance on GoFundMe campaigns for financial emergencies.
For Scott, advising African-descent clients often involves addressing a financial literacy gap and the influence of family obligations, or “Black tax,” where clients feel the need to support family back home. This reduces their ability to save for property investments.
By providing tailored advice and guidance, Scott empowers her clients to navigate the complex property market.
“Building trust within my community and supporting my clients to achieve their financial goals is what I value most,” she said. “A lender might say ‘no’ to my clients without offering detailed explanation or guidance… it is my job to ensure that my clients understand the lender’s decision, and work with them towards achieving a positive outcome.”
