As property prices stagnate and more lenders are offering good value high loan-to-value (LTV) loans, conditions are looking good for those wanting to buy their first home. Karen James, Head of Residential Conveyancing at Ramsdens says that now is the perfect time for first-time buyers to make their move...

Falling mortgage rates

They have found that interest rates are falling for typical high LTV mortgages, where customers might borrow 95 percent of the value of their home. One year ago, the average interest rate on a two-year fixed-rate mortgage was 3.95 percent, while today it has dropped to 3.23 percent.

Weakening housing market

March figures from the Royal Institute of Chartered Surveyors (RICS) revealed weak sales figures. Fewer properties are coming onto the market, with the number dropping consecutively over the eight months from September 2018.

First-time buyers are in a strong position, having no reliance on a downward chain. Those who have a mortgage arranged in principle and are ready to move quickly will be attractive to sellers wishing to avoid delay.

Help to Buy ISAs

The government’s help to Buy ISA scheme is set to close to new savers in November 2019. This means that first-time buyers who want to take advantage of the scheme need to open their ISA soon. An initial £1,000 can be deposited, with a maximum thereafter of £200 per month.

The scheme offers tax-free savings plus a donation from the government of 25 percent of the amount saved, up to a maximum of £3,000 per person. Two people saving £24,000 will be able to claim £6,000 towards the cost of their home. It should be noted that this money will not be available until completion of the purchase however, so cannot be used as a deposit in advance of completion.

Although the scheme will close to new savers in November 2019, members have until December 2030 to use their money and claim the bonus.

Katie Brain, Insight Analyst at Defaqto, said: ‘Buying a home is an expensive undertaking and for many years we have seen that first rung of the property ladder move further out of the reach of first time buyers. Now, with stalling house prices and cheaper borrowing, we are entering a period of opportunity for buyers looking to make their first home purchase. However, if they wish to take advantage of the government’s Help to Buy ISA scheme, they are going to have to hurry. Securing a 25% bonus from the government is not to be sniffed at but this really is a “use it or lose it” moment for first time buyers.’

Contact us

If you’re thinking of buying or selling a property, speak to one of our specialist property team on 0808 1685 643, fill out an online enquiry form, or email and we will be in touch.