Nearly half of the country’s first-time buyers (FTBs) are being hugely impacted by the coronavirus.
FTBs are bearing the brunt of the pandemic and putting their moving plans ‘on hold’ because of job/income stability and mortgage availability and restrictions.
Mortgage Lender Aldermore surveyed 1,000 prospective FTBs and found that due to the continuing crisis nearly half of people who were hoping to buy their first home are forced to delay it by an average of nearly 12 months.
Furthermore, the report indicated that one in five FTBs have had to pull out of a purchase due to lockdown and one in six had a property sale fall through due to the pandemic.
The findings found that nearly half say they are concerned about their financial security and overall four out of 10 FTBs felt the pandemic has made it hard for them to get on the property ladder and a similar amount saying it has made the whole process a lot more stressful for all parties involved.
On the brighter side the report showed that the government’s bid to revive the housing market with a stamp duty holiday for England and Northern Ireland has proven popular – with nearly a third of the prospective FTBs felt it will be a huge help for them when buying their first property.
Jon Cooper, head of mortgage distribution at Aldermore, says:
“First time buyers experience strong financial and emotional challenges at the best of times as they go through the home buying journey, but it appears now this has been heightened by Covid-19.
“The wider economic recovery will be the real determining factor for how the first time buyer market performs this year. First time buyers need job security if they are to feel confident in taking the plunge in what is one of the biggest financial investments of their lives.
“Stamp duty relief also appears to have received a positive response from first time buyers, with many seeing it as a welcome boost. The initial costs of getting on the ladder can be a real barrier to many, so anything that helps reduce that entry fee for some is welcome for the housing market.”
With the Bank of England confirming recently that the number of mortgage approvals made to homebuyers jumped to its highest level since August 2007, Wesley Ranger, Managing Director, Willow Private Finance, said:
“While this is great news, these figures only give a partial picture”…………”Banks are also increasing the cost of borrowing for higher loan to value mortgages, which is discouraging first time buyers and those with smaller deposits from buying properties…….”
Furthermore, Rob Houghton, CEO of reallymoving said:
………“More than ever people’s homes are their castles and their offices – and with borrowing costs likely to be rock bottom for the foreseeable future, paying over the odds on a purchase isn’t too painful if you’re also getting over the odds on your sale and making a stamp duty saving.”
But FTBs are being left behind in the crisis as Rob continued:
………”It’s a different story for First Time Buyers though, who aren’t benefitting from stamp duty savings in most areas and who have seen low deposit mortgages all but wiped out. This explains why the proportion of First Time Buyers in the market has dropped by 19% since May.”
Ross Counsell, Chartered Surveyor and Director at Good Move, comments on the Bank of England’s findings:
“The mortgage market showed more signs of recovery in August, with the number of mortgage approvals rapidly increasing. Government measures such as the stamp duty holiday have impacted this spike, with more people eager to take full advantage of the savings and purchase a home.
“However, we must not forget that the furlough scheme is soon coming to an end. This combined with job losses and income uncertainty will take some buyers out of the market. In the coming weeks, we hope to see lenders and brokers working around the clock to ensure their customers get the best mortgage for their circumstances at the best possible rate which in turn, will protect their assets.”
