Mortgage rates are unaffordable for many first-time buyers

The turmoil in the UK economy caused by the so-called mini-budget appears to have calmed, but the recession remains. The cost of living crisis shows no signs of abating either, with many first-time buyers delaying their first property purchase. For those who are living with family, this is perhaps less of a bad thing with more working adults in the household making paying the increasing bills that bit more achievable. For those who are currently renting in a difficult and precarious market, however, a reduction in mortgage rates can’t come quickly enough.

First-time buyer demographic

We all know that interest rates have risen and mortgage rates have increased. At the same time, property prices continue, in most areas, to steadily creep upwards and there appears to be no sign yet of the predicted property market crash.

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To access the best mortgage rates of the bunch, applicants need to have the best loan-to-value ratio they can by maximising the deposit they can offer. They can also benefit from borrowing over a longer period where this is allowed by their provider. With the average age of first-time buyers at a new high of 34 years, even a standard 25-year term takes the borrower uncomfortably close to retirement age before the mortgage is paid off.

Other costs

Of course, it is not just the high mortgage rates and the associated monthly bill that is putting off first-time buyers. Although stamp duty land tax is currently less of a burden due to the increased thresholds, this is not a permanent change and buyers will need to act in 2023 if they are to benefit from this saving. With house prices continuing to rise – albeit slowly – and with the vast majority of 95 per cent mortgages now off the table, the deposit remains the single largest chunk of cash an aspiring first-time buyer needs to find.

A recent survey by Aviva found that many first-time buyers underestimate the cost of a mortgage. They may also be unaware of the other fees and costs associated with house purchases. Companies such as can provide quotes for conveyancing services, which include information such as the vital homebuyers survey cost.

The key barrier to first-time buyers remains the affordability of the sharply increased mortgage rates; however, prospective buyers also need to factor in all the other costs of moving and conveyancing. The good news is that mortgage rates appear to have settled and some lenders are even reducing their rates slightly when targeting borrowers with good affordability and LTV credentials.

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Borrowers remain fearful that even if they can secure a mortgage at an acceptable rate, the risk of falling into negative equity should they unwittingly buy just before a property price crash is another factor that is making first-time buyers consider their options more closely. One product they may like to consider is a tracker mortgage, which can be a good option if they feel that interest rates have peaked and they are prepared to predict that the recession will fade and the economy will stabilise.

A good broker and conveyancing team will find the best deals and products for an individual’s circumstances. Now, more than ever, is the time to take advantage of the widely available professional advice.

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