Nobody knows how the property market will look over the next few months, and every property expert seems to be offering a different opinion. Some predict that there will be a housing market crash, while other housing experts tend to think that there won’t be much change.
However, something that has become apparent over the last few weeks is how difficult it has become for first-time buyers to get on the property ladder. Those that have a 5% deposit will struggle to find any lenders, while those with a 10% house deposit would’ve also seen the deals available to them take a drop.
Lauren Evans, a first-time buyer based in Cardiff, has found it difficult to purchase since the housing market has opened back up. She says:
“I had my mortgage in principle prior to lockdown where I had my 10% deposit. I’ve recently put an offer down on my dream home only for my lender to go back on the mortgage in principle saying that they’re now only offering mortgages on 15% deposits.”
Not only is it difficult for those that had smaller deposits beforehand, but it’s also going to be harder to save up for deposits in the first place, with Help to Buy ISAs now being dropped by the government and savings accounts dropping their interest rates.
On top of this, Chris Evans, Head of Specialist Mortgages at Pure Commercial Finance, thinks that low deposits won’t be the only thing holding back first-time buyers. He thinks that lenders will take extra precaution when lending to someone who is not considered to have a stable job in an unexpected circumstance.
“Those that have been furloughed over the pandemic may find it extremely difficult to prove the stability of their job and the lenders may not look at overtime and bonuses in full when they look at previous payslips to assess affordability”, he says.
It’s important for first-time buyers to remember that there are other costs involved in buying a house too, such as insurance and solicitor fees, and to keep a few grand back to be able to afford everything else too.
This Howells blog will go into a bit more depth about what sort of outputs first-time buyers also need to pay for, as well as their deposit.
As things slowly start to go back to normal, more lenders should be starting to increase their lower LTVs again, and things may be a bit easier for first-time buyers to get on the property ladder.
Until then, if you’re trying to take your first step onto the property ladder, make sure to shop around for the best mortgage deals. As Lauren found out, it is worth looking for the right lender.