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The Lesser Spotted First Time Buyer
Everyone loves them but it seems the first time buyer has virtually disappeared from the UK housing market.
Surprisingly the average age of a first time buyer in the UK is now 38 and in London this increases to 43! But why?
There are many factors causing this recent hibernation.
Five years ago 100% mortgages and low deposits helped many get their feet on the property ladder. However it's a very different story now. Lenders are insisting on much larger deposits, usually around the 15 to 20% mark and research shows that on average it will take a FTB approximately 29 months to save enough money for a deposit. But, it's not just high deposits that are causing problems.
Mortgage lenders have become very cautious when it comes to lending. They used to use a salary multiple to work out how much you could borrow but now they will also factor in your monthly expenditure and any other debts you may have. This has made it very difficult for many FTB's to not only get a mortgage but to get one for the amount they need.
The currect lack of job security coupled with a volatile property market is also putting many possible FTB's off. Many are waiting to see how far property prices will fall and how hard the recession will hit before spending their precious cash.
FTB's are trying to be enticed out with certain stamp duty exemptions and special first time buyer mortgages but it could still be a very long time before many feel brave enough to take the property plunge. In the meantime there is no doubt the housing market will suffer in their absence.
Source: Time For Money