With first-time buyers prepared to move further afield, some advisers will provide advice on locations
Home buyers have traditionally turned up at their mortgage broker’s door with a property in mind, seeking a finance solution to buy it. But in today’s tough market, some advisers are willing to go a step further and guide them on where they should look for a new residence that best suits their budget.
First-time buyers are especially prepared to heed their advice, it seems, and move miles outside of their preferred location, if it means getting on to the property ladder. The flexibility that many now have, of working from home, has broadened their horizons in terms of where they will take their search.
“In most cases, if a client falls short on affordability in their chosen area, we would give them an idea of where might be good geographically for their budget, which in turn hopefully gives them enough information, combined with their own research, to make the decision that is right for them,” explained Gary Clarke (pictured left), new build account manager at broker firm The Mortgage Store.
“I’m not sure it’s a standard practice, merely a common-sense approach to clients who fall short on affordability and helping them find a workable solution. As with any recommendation in the mortgage world, it’s not a case of “I think x, so you should do y”, it is more a case of helping explore people’s motivations.”
He added: “As we moved to more remote working patterns, people have been able to move further away from their current location than ever before. People, in my experience, are great adaptors and when push comes to shove, people will make sacrifices that even they might not have originally considered for themselves.”
Mortgage adviser Michelle Lawson, from Lawson Financial, confirmed that she, too, will provide guidance on where clients who are challenged to buy may consider house hunting.
“We will suggest areas, if they fall short, to enable them to maybe buy a cheaper property to fit their affordability better,” shared Lawson (pictured second from left). “Sometimes I will send over properties as well, that may foot the bill. I have always added value as I think it is part of the service - the penny may be dropping with others and I can’t speak for them.”
She said that while incomes may now be aligned nationally, there remained a regional discrepancy in the asking price for properties.
“There is a still a very strong north/south divide with property prices,” Lawson commented. “It is much easier for FTB’s to buy in the north, as there is a higher amount of disposable income.”
Where are the best areas for first-time buyers to purchase property?
A new study from the lender Halifax has pinpointed the most advantageous areas for first-time buyers, using data from its own house price index, and taking account of affordability, the diversity of housing stock in a given area, and its prospects for economic growth.
Manchester comes out top, where 75% of all homes bought with a mortgage are by first-time buyers (nationally the average is 49%). This is up from 65% in 2020. The average first-time buyer property price is £212,891, which is around £35,000 below the British average.
Slough, in Berkshire, and Sandwell, in the West Midlands, aren’t far behind - 73% of properties purchased with a mortgage in these locations are by first-time property purchasers. The average property price for first-time buyers in Slough is £322,961, around £75,000 above the British average, but still well below the average of nearby London (£490,235). In Sandwell, the average property bought by a first-time buyer is at £179,058, well below the national average, and £40,000 below the average for the West Midlands.
“First-time buyers are often more willing to relocate to new areas in pursuit of finding the ideal home within their financial reach,” noted Amanda Bryden, head of Halifax Mortgages. “This flexibility opens up a broader range of possibilities and can lead to more affordable housing options.”
Read more: Lloyds raises borrowing limits for first-time buyers
What is the role of a mortgage broker?
David Hollingworth, associate director of communications at broker L&C Mortgages, said that - as the business is dealing with clients from right across the UK - it couldn’t keep up with the markets in every locality. He was cautious about the idea of brokers advising on location.
“To an extent I also think that the broker’s role is to advise on what’s possible from the mortgage side, not where they should buy,” said Hollingworth (pictured second from right). “It’s up to the borrower to decide what they want to compromise on, whether it’s size of property, condition or location.”
For John Phillips, CEO of Spicerhaart estate agency, and broker Just Mortgages, there are still opportunities for buyers of all backgrounds to get on to the property ladder - if they broaden their search.
“We’ve certainly seen examples of FTBs looking outside their typical catchment to secure their first home,” observed Phillips (pictured right). “Not only are FTBs still incredibly resilient, but they have a clear appetite to make their move a reality, even if that means exploring a new town or city. Even with improving rates and hopes of inflation continuing to stabilise, the holistic view offered by a mortgage broker will remain really critical.”
