As a first time buyer, is it the right time to buy a property? As Bank of England holds base interest rate at 5%, should you keep waiting?
In a couple of our recent blogs, we have discussed why people perhaps shouldn’t wait for lower mortgage rates before buying a property and how First Time Buyers should get a move on now, to avoid the increased Stamp Duty Tax that will go live in March 2025.
Read on, if you are:
- Uncertain if it is the right time to get a mortgage? Will rates drop further?
- Is now a good time to buy?
- Unsure of your affordability or best financial options?
- Worried about bad credit or debt that you have?
These are all common concerns. Here we discuss more reasons, as to why buyers, certainly First Time Buyers, should look to purchase a property sooner rather than later.
Why now could be the right time to buy.
The common misconception we find at The Mortgage Broker, is that a significant number of people in the market, seem to want to wait for mortgage rates to come down further before they buy. In our current financial climate, mortgage rates are highly publicised and it does look as though over future months and years, mortgage rates will decrease further. However, we will not return to the rates that we enjoyed in the last two decades.
It of course could be better for your financial circumstances to wait before buying your first property. You may be trying to save for a larger deposit, trying to improve your credit file or worried you haven’t been in your job log enough. Here at The Mortgage Broker we work closely with lenders to help support those with smaller deposits or those with lower credit scores to get on to the property ladder.
Waiting may not be the most cost-effective option for you and could actually be counterproductive on your finances.
According to Skipton Building Society, 4 in 10 renters spend more than 45% of their income on essential housing costs, such as rent, which makes it harder to save for a deposit.
If you are currently renting, you could well be paying more than you would do for a mortgage. Whilst rental inflation has slowed down to 5.4%, and according to Zoopla, is the lowest in 3 years, it remains very high.
Demand for rental property remains high, with low supply, keeping rental costs at a premium. This could get worse with a consistent flow of landlords selling their properties.
In July 2024, 12.5% of homes for sale across the UK, were being sold by Landlords.
Do the math.
If you can buy a property, whether as a First Time Buyer or not, the question will remain; How much rent are you paying per month? Is this more or less than a mortgage, and consider your preference on paying off your own home mortgage, rather than someone else’s?
Make sure you speak to an independent mortgage broker who will search the market far and wide, not just high street banks, to provide you clear guidance on your mortgage position. There are thousands of mortgage products in the market, and rates are decreasing, so now is a good time to look and speaking to a broker will ensure you get advice that is right for you. Mortgage Broker’s work for you, not the mortgage lender!
Understand your position now, as house prices are increasing!
Post-election stability, combined with declining mortgage rates, has helped to fuel a rebound in the housing market, with buyer confidence increasing and thus demand causing higher prices. The Financial Times have published the below graph and with homeowners appearing more confident in coming to the market meaning this doesn’t appear to be slowing down. On the 6th of September BBC headlined that “House prices in the UK reached a two-year high in August and the recent interest rate cut has increased confidence among homebuyers.”
What does this mean as a potential first time buyer?
When deciding whether to buy now or not, don’t just consider the mortgage rates and whether they will be coming down in the future. By deliberating this decision, the property you have your eye on may go up in price or be lost to an increasingly competitive market. It is still a favourable buyers market, and you could well be holding back because you think you don’t qualify when in fact you do.
The fear of paying too much on your mortgage is understandable as it is of course a big commitment, most likely the largest in your life. However, mortgage advisers will ensure products are suitable, sustainable and affordable and you have to consider you could be paying more on your rental.
Zoopla have stated the average rent for new lets in the UK is £1,245 as of July 2024 (published in September 2024). We know London and other cities is far higher than this with rents of £3,000 plus, very common.
The average house price in the UK in June 2024 (according to UK House Price Index) is £287,192.
A mortgage adviser can access many different products, such as specific products for newly qualified professionals, where you can borrow up to 6x times your salary, There are 5% deposit mortgages available, and schemes to help renters with no deposit get on the property ladder. Also options to have a guarantor.
The standard assumption is a minimum 10% deposit is required. Which is a good place to start.. Of course, the more the better. However, with just a 10% deposit, it could be that your monthly mortgage payment will indeed be less than your monthly rental payment. Especially if you are currently living in an area with high rental cost. Table below, March 2024, Zoopla.
Please speak to The Mortgage Broker today, to understand your options with a free, no obligation chat around your mortgage position.
| Region | Average gross rental yield | Average monthly rent | Average price of a buy-to-let property |
| North East | 7.65% | £695 | £109,072 |
| Scotland | 7.48% | £793 | £127,284 |
| North West | 6.66% | £848 | £152,719 |
| Wales | 6.43% | £881 | £164,388 |
| Yorkshire and the Humber | 6.38% | £799 | £150,261 |
| Northern Ireland | 6.11% | £735 | £144,423 |
| West Midlands | 5.95% | £905 | £182,531 |
| East Midlands | 5.84% | £860 | £176,730 |
| South West | 5.37% | £1,077 | £240,472 |
| South East | 5.34% | £1,325 | £297,971 |
| East of England | 5.28% | £1,163 | £264,539 |
| London | 4.93% | £2,121 | £516,295 |
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