There have been many conflicting reports about the property market recently.
Some report that house prices are spiralling out of control and house ownership is an impossible dream for anyone without rich parents, while some say that the Help to Buy scheme has allowed thousands of first time buyers to finally get a foot on the ladder.
Recent Halifax figures suggest that while the property market is yo-yoing up and down (mostly up) the mortgage market for first time buyers has never been better. According to Halifax, there are more first time buyers taking out mortgages in 2014 than at any time since 2007 – before the recession.
After the housing crash mortgage lenders became much more careful with their money and scrapped all their packages aimed at first time buyers practically overnight. Gone were 100% mortgages – you’d be lucky to get one for 80%.
In order to help first time buyers onto the ladder, the Help to Buy scheme was introduced. This guarantees part of the mortgage to the bank, so the risk to the bank of lending a couple of hundred thousand pounds to first time buyers with small deposits is significantly reduced. This means they’re now able to give low interest rates – rates that were previously reserved for those with deposits of 40% or more.
“Fixed rates have been plummeting and hardly a day goes by without another change as lenders rejig their rates and adjust their competitive position,” says David Hollingworth of broker London & Country Mortgages.
Some argue that an attractive mortgage market is the cause of house price inflation – as more and more young people are tempted to climb onto the housing ladder, competition for affordable houses is rising, and so the prices just keep on going up. This demolishes any saving from low mortgages and interest rates.
High house prices are never out of the news – but it’s still worth bearing in mind there are actually two property markets – London and the South East an d the rest of the UK. Here in Wales, for example house prices are still below their 2008 peak, while in parts of London they’re 41.9% above this – and rising.
Should first time buyers take advantage of the super-low interest rates, or sit tight and cross their fingers for a property crash?
For those looking to buy in Wales or the North of England it’s definitely time to buy. Low interest rates and low house prices combine to make buying your first property very appealing indeed.
