Property Reporter



Are FTB costs starting to tick up?

Line Spacing+- AFont Size+- Print Forward to a friend Property
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.”

Got something to say? Leave a comment below:

You must be logged in to leave a comment

More articles from Property

FTBs fight back

How much would you pay to live near a outstanding primary school?

House hunters at lowest levels for 2 years

How many properties in the capital are priced at the average or below?

Have we neared the limit in house price rises?

How do you pick the right estate agent?



Latest from Financial Reporter

The Lending in Retirement Debate Isn't Going Anywhere

FCA appoints PRA exec to Director of Supervision

Software provider Target sold in £112m deal

Fitch upgrades Skipton after balanced mortgage growth


Latest from Commercial Reporter

New funders and commercial property

ASTL: Upward trend for bridging continues

Fleet makes criteria changes for limited company transfers

Are SME overdrafts dying out?


Latest Comments

Paul
Paul 25 May 2016

Estate agents are pathetic when it comes to fees. They have this 'I had to do it at 1% because that's what the others were quoting' mentality. We are the most expensive agents in our area, charging double...

view article
HMO Midlands Landlady
HMO Midlands Landlady 24 May 2016

Tenants disappearing into the night is common from shared houses ( licensed and un-licensed HMO's) often when they owe considerable rent- they remove all their possessions, leave key in room and tell other...

view article
CommercialTrust
CommercialTrust 20 May 2016

With the bulk of the market controlled by large developers, profit rather than necessity determine the pace at which homes are built. There are hundreds of thousands of plots that have planning permission...

view article
Johna
Johna 20 May 2016

"Easier said than done" is what I would say. Of course, it would be more than great to have more in quality and affordability, but I do not trust talk anymore.. What is said is not what is happening.

view article
Johna
Johna 20 May 2016

in my humble opinion being fair like THE most important! I myself have had bad experience with unfair landlords... not to mention that I know how to do a proper end of tenancy cleaning since I am a fantastic...

view article
richardrawlings
richardrawlings 18 May 2016

NB - even if we doubled our commission levels in the UK, we'd still be by far the cheapest agents in the entire world.

view article
Agent_PeeBee
Agent_PeeBee 18 May 2016

Clueless. Someone needs to take these people's computers away from them so they can do no more harm than they already have.

view article
richardrawlings
richardrawlings 18 May 2016

Nonsense! The cost of selling a house nowadays has little bearing on the fees charged. Don't believe your own spin on this. Fees have spiralled down to pathetic levels in areas where weak agents have allowed...

view article
Simon Oliver
Simon Oliver 16 May 2016

The best solution is to buy a property that has built-in income generating potential: a nice house with a couple of gites in the grounds is a good start. In France, the rune of thumb is that one 2-bedroomed...

view article
WPD
WPD 12 May 2016

I suggest the answer is to have the notary system being one legal person who represents both parties. Having experienced it a couple of times in France it was a dream compared to our dysfunctional system....

view article
warren
warren 03 May 2016

It's enough to make me weep into my Pimm's :(

view article
james anderson
james anderson 03 May 2016

The sad demise of the croquet lawn...

view article

Latest Tweets