Are FTB costs starting to tick up?

Are FTB costs starting to tick up?

The costs for buyers of owning their first home have lightened over the past twelve months, but there are signs that low stock and rising rates could put this to an end in 2016.

The average price at which buyers are purchasing their first home fell from £155,745 in November 2014 to £148,385 in November 2015, representing an annual price drop of 4.7% – or £7,360. November 2015 also marked the first time that the average purchase price for a first-time buyer home has fallen, on an annual basis, since March 2013.

First-Time Buyer Affordability

Average deposit

Deposit as proportion of income

Average mortgage rate

Mortgage repayment as proportion of income

November 2015

       £24,598

62.5%

3.37%

18.6%

October 2015

       £25,792

65.6%

3.34%

19.1%

1 month change

        -4.6%

-3.1

+0.03

-0.5

3 month change

        -7.7%

-4.8

+0.02

-0.3

1 year change

        -4.2%

-4.8

-0.55

-1.7

This purchase price drop for first-time buyer homes stands in contrast to the annual trend for the overall property market. The latest LSL Acadata House Price Index reveals that, across England and Wales, the average value of all property rose by 6.0% – or £16,446 – and now stands at £290,640.

Deposit costs have also fallen. In November 2015 the average deposit for someone looking to buy their first home stood at £24,598 – a drop of 4.2%, or £1,097, from November 2014, when the figure stood at £25,665. Alongside this, the proportion of an average first-time buyer’s income which is consumed by the deposit has dropped – from 67.3% in November 2014 to 62.5% a year later.

First-time buyers are experiencing a largely brighter picture when it comes to mortgages. The average loan-to value rate on a first-time buyer mortgage has climbed between November 2014 and November 2015 – from 82.8% to 83.4% – meaning that first-time buyers need less up-front capital to make their dreams of homeownership a reality. Over the same period, the total number of high LTV loans has jumped by 43.7%, according to the latest Mortgage Monitor from e.surv.

However, despite the average mortgage rate for first-time buyers falling between November 2014 and November 2015 from 3.92% to 3.37%, there have been more recent signs that mortgage rates for FTBs are beginning to tick up. November 2015’s average mortgage rate represents a 0.02% percentage point increase on August and a 0.03 percentage point increase on October, meaning that first-time buyers will be, on average, shelling out more – albeit a small amount more – to pay their monthly mortgage interest.


Adrian Gill,  director of estate agents Your Move and Reeds Rains, believes that a mixture of luck and pluck have seen costs fall across the board for first-time buyers this year:

"Rising real-terms wages as economic conditions improve have certainly been instrumental in helping those setting foot onto the property ladder devote less of their salary to mortgage payments and deposit costs. These were obstacles that were previously holding many back from taking the plunge and buying their first home. Equally, a more fluid mortgage market has given many first-time buyers the chance to own a home off the back of a mortgage that two or three years ago they could only dream of obtaining.

But first-time buyers are not just passive recipients of success – they have played their part in bringing their homeownership costs down. The sizeable fall in the average purchase price for a first-time buyer property is largely due to property hunters toughening up and driving hard bargains to get the home they want for the price they want. The question going into 2016 will be whether first-time buyers can continue playing hard ball with a smaller housing stock, as well as contend with less favourable mortgage deals as the Bank of England creeps ever closer to that long-awaited interest rate rise.”

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Latest Comments

AbbieP.
AbbieP. 22 Jul 2016

"While house prices in the most expensive eleven boroughs have declined values in the cheapest eleven boroughs continue to rise" - not a nice way to even out the price range. London is overrated as it

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AbbieP.
AbbieP. 21 Jul 2016

And try to profit from your decisions, I may add

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CommercialTrust
CommercialTrust 19 Jul 2016

Retirement investment has always been one of the biggest draws of buy to let. And the buy-to-let demographic is, on balance, older. (Over a third of our applicants are over 50 at the time of application.) It...

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Forrest Wheatey
Forrest Wheatey 11 Jul 2016

I find the time perfect for ever home-owner wannabe. Prices should slowly, but steadily drop, at least for the inner buyer. Making it harder for outsiders to buy properties (the whole Brexit thing means...

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property guru
property guru 11 Jul 2016

Why should Ajay even have to be looking for it. It should be public knowledge. Why is not just publish each years and to were it is and be AUDITED. Accountability.

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property guru
property guru 11 Jul 2016

Surprise suprise

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CommercialTrust
CommercialTrust 30 Jun 2016

This is great news for buyers and investors in a period of significant uncertainty. The 10-year buy-to-let fix at 3.99% in particular is excellent, a clear 100 bps ahead of the nearest competition. Though...

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Lee
Lee 30 Jun 2016

Let's see what happens to north-east property prices when Nissan announce they're leaving.

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DmitriKara
DmitriKara 29 Jun 2016

I just read another article about eviction rising and this was exactly what was on my mind, Housing has become "cat and mouse"...

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DmitriKara
DmitriKara 29 Jun 2016

I am really not surprised. I've seen one too many impudent tenants and in my humble opinion renters have one too many privileges and options to abuse heir landlord in so many ways...

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DmitriKara
DmitriKara 29 Jun 2016

There is still so much uncertainty and I will surely step back and see what's happening before I could make any decisions on my end.

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ChristinaReedUK
ChristinaReedUK 20 Jun 2016

I don't understand why it's always a war between the two sides. Either, way the landlord is probably keeping a detailed inventory and will see the changes you've made. I just don't understand why there...

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