WHILE being a first-time buyer has never been easy, this is arguably harder than ever in the current economic climate.
After all, the base rate of interest is poised to reach a 33-year high of 3%, while aspiring first-time buyers are also struggling to cope with rampant inflation that peaked back above 10% in September.
Subscribe to our daily newsletter
Why? Free to subscribe, no paywall, daily business news digest.
We’ll explore this further below, while offering some handy tips for first-time buyers in the marketplace:
The Current Housing Market – At a Glance
Recently, we’ve seen some 40% of mortgage products withdrawn from the market by lenders, amid growing housing market uncertainty and wider macroeconomic tumult.
This is having a direct impact on real-time demand and the ease with which first-time buyers (especially those with poor credit histories) can move into the marketplace, with thousands of mortgage offers having been withdrawn since the beginning of September.
Of course, the fundamental rules of supply and demand mean that prices are bound to fall in instances where demand declines but the supply of housing remains unchanged, and it can be argued that this actually offers an opportunity to first-time buyers in the current market.
However, prices are only projected to depreciate by a total of 10% between now and the end of 2024, while even a more pronounced decline in property prices means little unless buyers are able to access viable mortgage products.
This creates something of a bind for aspiring first-time buyers in 2022, and one that may be difficult to break free from until the macroeconomic climate improves in this country.
OK – But What Can You do as a First-time Buyer?
The question that remains, of course, is what can aspiring first-time buyers to thrive in the current climate and process a successful mortgage application? Here are some ideas to keep in mind:
#1. Save a Big Deposit if You Can: In the current climate, a big or sizable deposit can be worth its weight in gold. Certainly, this reduces the size of your mortgage and the demands placed on lenders, enabling you to access more favourable terms by increasing the range of available products you can choose from. This takes time, of course, but this may afford you an additional advantage if you’re able to save and subsequently make an offer as property prices continue to decline over the course of the next two years.
#2. Don’t Forget the Extra Fees: By saving a deposit and additional cash holdings, you can also comfortably cover additional fees such as conveyancing costs. Such costs are integral to a successful purchase, as they help to ensure that you’re buying a property that’s fit for purpose and can efficiently move through the various stages of negotiation.
#3. Don’t be Afraid to Negotiate: Make no mistake; negotiation is key to any home acquisition or transaction, although first-time buyers may occasionally be a little cowed or overwhelmed by the entire process. However, it remains within your remit to negotiate house prices and terms with vendors, either directly or through your legal representatives. So, don’t shy away from this, as it could help to reduce your mortgage burden and make the difference between a successful or failed application.
