As the cost of living crisis continues to bite, inflation soars and the Bank of England raises interest rates, the property market and, in particular, first time home buyers are being severely affected. Figures indicate that it is people attempting to get on the first rung of the property ladder who are most likely to withdraw from purchases as the costs of mortgages rise in the wake of the mini-budget and Autumn Statement.
Research from Rightmove, the property platform, demonstrated that demand from buyers has fallen by a disturbing 20 per cent in October of this year, compared with October in 2021. Mortgage rates rocketed following the mini-budget from the short-lived Truss government and many property owners are now facing additional mortgage costs that may be running into hundreds of pounds a month.
If you were taking out a fixed-rate mortgage a year ago, you may have expected to pay in the region of 2.25 per cent. If you looked for the same mortgage today, the rate is likely to be more than 6 per cent. With property prices so high, any extra percentage points on a mortgage can push costs to an unmanageable level.
Disturbing figures
The Rightmove figures revealed that first-time buyers have been significantly affected as demand from this group for property has fallen by 26 per cent compared with this period last year. To consolidate this picture, recent figures from the Royal Institution of Chartered Surveyors indicated that inquiries from first-time property buyers had decreased for six months in a row by October.
Many people may be worried about how to meet the increasing costs of their mortgage. A recent report from The Times attempted to explain what the Bank of England’s recent rate rises would mean for ordinary households.
Tightening belts
For those already with a property, the increased cost of their mortgage could be problematic, but many people can find ways to budget and accommodate their extra costs. Some mortgage holders may even remember when interest rates were 17 per cent.
However, for many first time buyers, increased mortgage costs may mean the end of their dream of owning a property. Saving a deposit is becoming more and more difficult and the rate rises could be the straw that breaks the camel’s back.
A deposit is not the only cost that first-time buyers face. Depending on the price of the property, there may be Stamp Duty to pay. Conveyancing and legal fees can also add to the cost of buying property. No one wants nasty surprises when it comes to the bill so sometimes it’s good to arrange a fixed price deal when it comes to conveyancing. If you are looking for fixed fee conveyancing, then it would be worth looking at what is being offered by a selection of firms experienced in fixed fee conveyancing. Firms such as Sam Conveyancing have offered fixed fee arrangements for some time.
The economy is in a precarious state right now and the effects are being felt across the country, reflected in rising mortgage costs that are presenting new obstacles to first-time buyers. It is hoped that the situation will stabilise in the next few months and that first-time buyers will soon be able to revive their dream.