What can first-time buyers do as mortgages disappear as home prices rise? | Property

THe cited this week’s report of the nationwide horrific housing market – another painful record high by raising prices by 2% in August alone – that it was inevitably welcomed as good news at some point.

One property industry commentator wrote: “I am pleased to see two positive sets of market analysis this morning, with property values ​​reaching new heights, an impressive endeavor, all things considered. Arm Shi Sunak’s shot for the housing market has certainly worked. “

Do you wonder if these people ever have to save for the high wages and deposits of young workers year after year and consider the misery of keeping their period prices out of reach?

HSBC followed suit as Nationwide issued its bad news for first-time buyers; It says they will no longer be able to get a 90% mortgage. After all, they will be able to find 85%. HSBC was almost the last bank to offer low-deposit mortgages and they were overwhelmed by the demand. This means that buyers of average UK homes now have a minimum deposit of 33 33,000 before 22,000.

It is interesting that banks are leaving the buyer market for the first time. They did it for the last time in the wake of the Great Financial Crisis at 200 time-08, because they did not have the money to pay. Today it is the opposite; Banks are concerned about the large amount of cash from the money spent during the coronavirus lockdown.

People look in the window of an estate agent.
Banks were the first to leave the buyer’s market after the financial crisis of FY2007. Photo: Phil Noble / Reuters
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Why aren’t they lending? Once the friend vacation and furlough schemes are over and we see the real state of the economy, they are soon going to face arrears and defaulters. They think that if they lend £ 250,000 in cash to buy a £ 250,000 home, if they have to repay it in a year or two, they will not get all their money back.

As director of a bridging company, Glenhawk said: “Winter will be a cause of pain for millions of people. The end of Farloof is imminent, and before that we have become a bigger cause than the second episode. The market looks dangerously close to the bubble zone; The matter of bursting “

So where does it leave first-time buyers?

1) There are still nationwide. It has a%-to-price mortgage at 24.24% but has a lot of strings attached. You can’t use this money to buy a flat or a new build (which is just as crazy as it is now), you can only take an orrow for 25 years, 30 to 40-year terms, wisely, can’t become commonplace anywhere else. And you can’t just give your mom and dad a deposit – to get a mortgage with a 10% deposit, the buyer must prove that they made a deposit of 5% saved

2) Charcoal broker Ray Bulgar is a fan of the Barclays family Springboard deal. The bank will pay you 100% of the cost of buying your home, so there is no need for a deposit. So what’s the catch? Okay, you need a helper – even if it doesn’t have to be your parents – who want to keep an amount equal to 10% of the value of the property purchase in the bank’s support startup accounts. They will also get a decent interest rate on the money in the account at today’s standards – currently 1.6%. Meanwhile, the buyer is offered an interest rate of 2.95% on a fixed mortgage for five years. This is a very interesting deal.

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3) Borrow your deposit or take someone on your behalf. No need to recommend it but brokers are telling me it is going on. Unsecured personal loans are also very cheap – for example, TSB currently offers five-year personal loans at a rate of 2.61%, which is cheaper than the rate at which a first-time buyer pays on a secured mortgage on a property. Of course, there are small issues with monthly repayments, which in most cases ruin this strategy; That’s 7 357 a month at 20,000 20,000.

4) Take the rent and wait for the price to sink again. It’s a risky game to play. Currently there is a “race for space”, with young families leaving the city to buy more space and a property that can work from home with a well-sized garden. If you want to buy there, turn on your skates before prices rise further beyond reach. But if your thing is a flat in the city center, you can probably stay out of the market, save more deposits, and read the prices flatline or next year.

5) Follow the gold rules for first time buyers. Avoid a bed, if possible stretch yourself to two beds. The demand for a one-bed flat (including shared ownership) is declining and the values ​​are evaporating dramatically. Two beds allow you to rent a house if you are financially damaged. Buy the worst house you can afford for the best street then fix it while living. This is the best way to climb a ladder. And the lease is transparent.

You may also want to look at this year’s budget more closely than usual. Sunak has pumped the market with stamp duty cuts. But he is desperate to raise taxes. One of the ideas to keep the Treasury agenda in mind is to increase the capital gains tax, which is equal to the income tax rate. This would have a dramatic effect on the buy-and-go landlords, who assumed that the CGT rate would not rise until April next year, rushing to sell at least some of their portfolios before taking extra charges. One of the things that is raising prices right now is the shortage of properties for sale; We will see the end of this year if the landlords fix the time of sale and exit.

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About the Author: Forrest Morton

Organizer. Zombie aficionado. Wannabe reader. Passionate writer. Twitter lover. Music scholar. Web expert.

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