Brokers give their verdict on present conditions
The number of first-time buyer mortgage products has fallen by a quarter since the end of Q1 2023, according to estate and lettings agent Barrows and Forrester.
While market conditions have proven to be particularly unsteady in recent times for first-time buyers, some brokers believe it is their expectations that need to be more realistic.
First-time buyer conditions and attitudes
Darryl Dhoffer (pictured), of The Mortgage Expert, said first-time buyer enquiries have reduced into the third quarter of this year due to the volatile interest rate environment.
“This has affected affordability for many clients, with reductions in the amount they could borrow compared to six months ago,” he said.
He noted that price reductions are apparent in large town and city areas, which has affected first-time buyer offer activity, as the consensus seems to be that house prices will reduce further. Many that are living with parents or family, Dhoffer said, appear to be sitting this one out; however, he added that renters are keen to move, but are hopeful rates will reduce further before taking the plunge.
In addition, Dhoffer said the quality of properties coming to market, such as buy-to-let properties that are now becoming available to buy as residential property, are often not the standard of property that first-time buyers are looking for.
“Many of the properties coming to market at present are requiring a lot of work to be home ready, which is leading to many properties not being sold; first-time buyers are taking their time it seems, and treading carefully,” he said.
Mike Staton, director at Staton Mortgages, agreed with Dhoffer that a lot of first-time buyers are being priced out of the market for affordability reasons.
“I also think there is a deeper reason for this too, the Instagram generation want a show home to post wonderful pictures on to social media as they live a champagne lifestyle on a lemonade budget, and a lot are turning their noses up at cheaper properties,” he said.
Staton added that “gone are the days of young buyers doing what we used to do,” buying a cheaper house in a rundown area to get on the ladder; instead, he believes the younger generation want the home of their dreams at the first attempt.
First-time buyers, Staton believes, need to be realistic, and he added that a £400 monthly charge for the Audi A1 they have along with their £80 monthly iPhone bill, is not going to stack up on a lender’s calculator on a £23,000 a year salary.
“So, while I hear people complaining that lenders, the Bank of England and the government are not doing enough to help this part of the market, a big portion of these applicants need to get a grip of reality and realise getting the home of your dreams takes time and effort,” he added.
Positives out of a negative
Gary Bush, financial adviser at the Mortgage Shop, said the only good thing that has come out of the mortgage rate crisis is that it has seen a lessening, in most areas of the UK, of the queue of people all chasing the same decent properties.
“This is helping first-time buyers to grab those chances to finally get on the ladder; we have seen through Brexit, COVID, the Ukraine War, and now inflation, that buyers are delaying their first purchases,” Bush noted.
With fixed interest rates now beginning to decline and low deposit mortgages available, Bush said it would be sensible to make the leap now before the property market reheats.
Rhys Schofield, brand director at Peak Mortgages and Protection, said with a dearth of rental options, and those that are available skyrocketing in price, homeownership is preferable for many.
“There are great ways to get on to the ladder for first-time buyers even without deposits, and if we keep shouting about that on social media, clients continue to find their way to us,” he added.
How are first-time buyers coping in current market conditions? Let us know in the comment section below.
