So says UK Finance, the organisation representing the UK banking and lending industries. According to the group`s latest figures first-time borrowers accounted for £5.9 billion of loans in June, an increase of 26% on the month before and up 9% on June 2016. This amounted to 36,000 individual home loans, an overall increase of 6% for the year.
Low interest rates and the government`s Help to Buy equity loan scheme are encouraging much of this increase, and are helping to offset any stagnation in other areas of the property market. Under the terms of the Help to Buy scheme purchasers of new-build properties costing less than £600,000 need to provide only a 5% deposit to secure their property, with the government claiming that in the three years since its` introduction in 2013 over 150,000 people have used the scheme to fund the purchase of their property. The position in London is less favourable due to the higher cost of housing, requiring proportionately higher deposits for first-time buyers. Figures from the Office of National Statistics also confirm a general slow-down in the London housing market, which grew at a rate of 2.9% for the year to June compared with a national average of 4.9%.
With the huge increase in Buy to Let properties in recent years many people new to the housing ladder may be tempted to rent rather than buy. However, with interest rates so low and setting aside the need for a deposit, some reports claim that a mortgage for the same property are on average cheaper than rental costs. Saving for the deposit on a property can undoubtedly be a major issue for prospective buyers, but the Council of Mortgage Lenders estimates that 46% of first-time buyers under the age of 30 are financially supported by parents or other relatives when buying their first property. In other instances Shared Ownership schemes offer the chance to buy a percentage of a property (between 25% and 75% of the home`s value) and pay rent on the remainder, with the option to buy a greater share of the property later.
The baby boomer generation may have had the best of it when it comes to buying a house and seeing it steadily increase in value, but with low interest rates and the help currently available to first time buyers there may not be a better time to get on the property ladder.
For more information read the UK Finance Report
If you are a buying or selling a residential property please contact either Anne MacCarthy or Isobel Doherty for a fixed fee conveyancing quote. For commercial property enquiries please contact Kamal Mustapha.