As the UK emerges from recession, one of the best indicators to measure the strength of the economy is to look at first time buyer figures.
A recent article on thisismoney.co.uk discusses newly acquired figures from July 2014, these figures show that the number of first time buyers has increased for the first time since August 2007 – before the property bubble burst as the country headed into recession.
First time buyers are finding that the deposit needed to secure a property has decreased by around £3,000 on average – but most first time buyers are still coughing up a deposit of over £26,000 in order to be accepted for a mortgage, and to land their first home.
Although some statistics point to the housing market picking up, other figures released by some mortgage lenders point to a slowdown in the amounts of money that they’re lending to buyers. These reports of decreased lending suggest that the property market may slow down once again in the near future.
There are various theories circulating as to why more first time buyers have been able to enter the market, with the most likely reason being the increase in government backed assistance for buyers thanks to the Help To Buy Scheme. This scheme offers higher loan to value mortgages for buyers, allowing them to purchase and move into a property with a much smaller deposit – sometimes of just 5%.
As the country continues to witness financial growth following on from the recession, many experts and observers are calling for buyers to be aware of the potential increase in mortgage costs, when the Bank of England increases the base rate. With buyers spending a higher proportion of their income on mortgage repayments, even a small increase in the base rate could lead to significantly higher mortgage repayments – which can in turn lead to financial difficulties.