Research by Latimer found that 25% of those aged 35-44 believed that they would never get be able to afford their first home.
Although we are seeing improvements in rates and the number of products on the market, many people still feel that they cannot, and in some cases may never be able to, afford to get on the property ladder.
IFA Magazine’s cohort of industry experts have shared their thoughts about when confidence may return to those wishing to buy as well as the ability to do so?
Robert Winfield, Managing Director at Chartwell Funding said: “There are two main factors deterring first time buyers and that is the cost of houses and the cost of mortgages.
“If we look at cost of houses first, I don’t think we are going to seeing great reductions in prices and therefore an education overhaul in why Shared Ownership is required. Too many people pooh pooh this as an expensive way to get on the ladder, but I have experienced first-hand how it can really help and is typically cheaper than renting.
“The cost of mortgages is already starting to reduce and lenders are reviewing their criteria to see if they are comfortable lending more again. Whilst I am acutely aware that one bit of bad news can send rates soaring again, a hold at the next MPC meeting would be a huge indicator that maybe 2024 could be the year to take the plunge.”
Nick Green from Alternative Estates said: “For the last 2-3 months its been slow with home buyers mortgage wise, but in the last week or so we have had an increase in buyers, in particular FTB enquiries.
“Affordability varies region to region, we are based in Coventry where a typical 3 bed terrace is £250k, to rent this house its £1,200-1,300 versus a 35 yr mortgage for £225k is £1208/m at 5.5% (10% down). So with the drop in rates recently you can buy a house for the same as renting it if your young enough for a 35 year mortgage.
“Once you hit the 35 mark or over these figures become less attractive so yes I agree the affordability begins to fall down the less years they have to pay back.”
Richard Dana of Tembo Money said: “Mortgage house sales are projected to be around 30% lower this year, so there is certainly a significant reduction in volumes.
“As sellers start to become more realistic on pricing and buyers are able to see they are getting good value things will start to move. It feels like there is certainly further for the property market to decline, but it is important to consider the alternative options – the main one being renting.
“With the rental increases many have suffered, buying still remains the most attractive option. As rates edge closer from 5% to 4% that is when we will see a real turning point, as there is certainly built up demand from first time buyers.”
Amanda De Courcy of ADC Financial said: “Two sides to this: firstly the banks are forced these days to stress test affordability at a high rate, so often people don’t qualify for a mortgage when they should (ie: their rent is more than mortgage repayments would be). In addition, lenders need to offer a higher percentage so that the deposit requirement is smaller, but with property prices falling and stabilising at best, this could be a dangerous strategy for the lender.
“Secondly, many young people aren’t interested in owning their own homes any more. They like the flexibility of relocating that renting can provide. However, banks and other lending institutions are nervous about lending money for any purpose to ’non-home-owners’ and so it’s a conundrum! The UK is still very much geared to home ownership as a major measurement of stability.”
Kaukab J Mirza (Kay), Mortgage & Protection Advisor, Charles Crown Financial said: “To be able to get on the property ladder has always been difficult due to lack of knowledge of what is available from lenders and knowing their appetite in accepting mortgage applications.
“Furthermore, constant interest rate fluctuations and unpredictable economic changes add to the complexity of the buying decision.
“Fortunately, there are now many new lenders available apart from the standard high street lenders. These are called alternative lending banks; their criteria is less restrictive, and they can help with complex and quirky cases that don’t fit under the high street lending banks criteria.
“Knowledge is the key in helping clients to take their first steps onto the property ladder. The confidence and ability to buy can be greatly enhanced by finding a good mortgage broker who has knowledge of alternative lending banks and their criteria and is experienced in helping clients to achieve the goal of buying their first home.
“So, the turning point really can happen if the client proactively seeks out the right knowledge and expertise that will help them make the best possible choices currently available to them and thankfully there are now many mortgage brokers out there who can help with this.”
