Every cloud has a silver lining and the one bright spot in the current slower housing market is that lower prices and fewer investor buyers have at last created more opportunity for younger first time buyers to get on the first rung of the ladder.
When the market was going full steam ahead, younger buyers were often at a disadvantage competing against experienced investor buyers with larger deposits. But now buy to let investors have been hit by tax and regulatory changes which make it a less lucrative proposition. Recent data shows first time buyers are now 50% less likely to face competition from an investor buyer when making an offer. In July for example only 1 in 10 properties in London went to an investor buyer and this was their lowest share of the market for 7 years. In Ham and North Kingston we have certainly noted that the proportion of first time buyers on our applicant register and amongst our proceeding buyers is higher than we’ve seen for some time. With some softening of asking and achieved prices over the last 3 months, proprieties have also moved closer towards younger buyers levels of affordability and borrowing criteria.
For the moment mortgage rates remain historically very low, which is another incentive, and typically mortgage lenders now allow younger buyers to spread payments over a longer period of years with the most common term now being 35 years. This makes monthly payments lower (although of course it also means more capital is spent over the longer term. ) There have been recent noises from the Governor of the Bank of England Mark Carney and other members of the interest rate setting Monetary Policy Committee that they are looking to raise interest rates in the near future, which can be another incentive for buyers to get a mortgage now and lock it to a fixed rate before they rise. Whatever the reason, we are pleased to see the return of the first time buyer in greater numbers.