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Is It Now Or Never For First Time Buyers

Journalist: Newspage News Desk

ended 15. August 2023

Wages have risen to 7.8% in June, above expectations narrowing the gap between earnings and house prices and with many traders now betting on the base rate to peak at 6% by March, could this mean first-time buyers miss out due to waiting for house prices and mortgage rates to fall?


A few quick questions.

  • What will happen to mortgage rates if the base rate peaks at 6% by March?
  • Even if house prices fall, something many FTBs are hoping for, will any reduction offset the potential increase in mortgage rates?
  • Are we going to see a repeat of earlier in the year, where mortgage holders and first-time buyers miss out on better deals through inaction by thinking they can time the market?
  • What advice are you giving to aspiring homeowners? Sit tight and wait or strike while the iron is hot?

As always, keep your answers punchy and to the point.

10 responses from the Newspage community

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Editor
Ranald Mitchell
Director at bad credit mortgage specialists Charwin Mortgages
The right time to buy a property is when you can afford to. Yes, pay more on your mortgage whilst bagging a bargain property price, or get a low cost of funds whilst paying a premium for the asset. There is never a perfect time. It is all about individual situations and grabbing opportunities. Either way, the real winners are those who affordably get on the property ladder. Once onboard, it is usually onwards and upwards. Just don't overextend!
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Editor
Darryl Dhoffer
Founder at The Mortgage Geezer
First Time Buyers need to view their new property as their home, so should be aware of risks but not fixated on rates and/or price crashes - here's my advice for clients:
Act fast: the market is competitive. Be prepared to make an offer as soon as possible.
Be realistic about your budget. House prices in some areas are still high and not expected to come down.
Consider a smaller property. They're often more affordable and easier to find.
Get a good mortgage broker. They can help you find the best deal and navigate the process.
Don't be afraid to negotiate. The asking price is just a starting point.
Be patient. It may take time to find the right property.
Do your research. Understand the different types of mortgages, and costs involved.
Be prepared to compromise. You may not find your dream home straight away
Don't give up. Buying a home can be daunting, but it's worth it.
You cant change yesterday, or control tomorrow, but you can act today, and it might turn out better than expected.
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Platinum
Elliott Culley
Director at Switch Mortgage Finance
Some first time buyers have put off looking now hoping rates will fall and house prices will be lower. History shows you can't have both so advice to first time buyers should be the same as it always has been. if you can afford the monthly payments and you find a house you love then it's the right time to buy.
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Premium
Jamie Alexander
Mortgage Director at Alexander Southwell Mortgages
If your plans are for the long term then there is no reason why you would not buy now. There are a lot more deals around with properties, that we are seeing, so now is the time to take advantage.

I'd recommend purchasing in a reputable neighbourhood, steering clear of large apartment complexes, seeking out a property with potential for improvement (without it being in a dilapidated state), and planning to reside there for at least 3 to 5 years +. I don't think first time buyers would have anything to lose as long as they carry out their due diligence.
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James Miles
Director - Mortgage Adviser at The Mortgage Quarter
Although rates have increased from historic lows FTBs have never known it any different so the advice remains the same. If you're ready to move and can find the right mortgage within your budget then now is as good as any time to buying a new home. With greater flexibility of the term of a mortgage and the ability to secure your payments the right measures are in place to help plan and start on the property ladder. If you're even contemplating about moving obtain a decision in principle with a broker and see where you are on the home buying process.
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Jamie Lennox
Director at Dimora Mortgages
Deals are there to be done, with many sellers now struggling to sell their properties due to the current high rates available. We are seeing more first-time buyers bag a deal on properties vs previous years. First-time buyers need to think of the bigger picture, yes house prices could fall, but their parent's generation would have gone through several periods of property downturns, yet have gained large wealth from time in the market vs timing the market.

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Joe Garner
Founder & Managing Director at Joe Garner Consulting
If you are buying a home with plans to stay for at least 5 years then the right time is always now.

Mortgage rates have been artificially low for the last decade and are likely to settle around 4% to 5%. The difference between 4% and 6% on a £200k loan in terms of monthly repayment is £230 a month on a 2-year fix over 25 years.

As an investment or a short-term purchase, this difference is prohibitive but on a 2-year fix the total extra payment on your mortgage, based on historical data, will almost certainly be covered and some by the increase in value of your property.

My advice is to buy in a good area, avoid big blocks of apartments, buy a property that can be improved without buying a wreck and plan to live there for 3 to 5 years as a minimum.
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Matthew Charnock
Managing Director at Mortgage To Home
The majority of lenders have already factored in pricing to reflect any base rate increases. In fact, we are still seeing some reductions, therefore, it is not all doom and gloom.
If you want to move and can afford to move then it is absolutely the right time. Things are only going to get better with predictions of base rate reductions in the coming years, so no reason to sit tight at all.
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Jon Davis
Founding Director at Davis & Co Financial Solutions Ltd
If the last few years have taught us anything, it's that speculation is a dangerous game to play when it comes to mortgage rates and the property market. Yet, there are still too many first-time buyers out there being bamboozled by social media 'gurus' who don't seem to understand the difference between an investment and someone's home. What we do know about the market is that it will either go up, go down or stay the same. The best thing First time buyers should be focused on is the here and know and advice should be primarily focused on the here and now, i.e. what we know, and focused on the buyer's needs and circumstances rather than trying to predict the future of rates and prices.
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Gary Boakes
Director at Verve Financial
Is this the right time to buy? If i had a pound for every time i was asked that over the years i could have retired by now. The answer is that it is always the right time if that is what best for the customers and their set of circumstances. What will be right for one won't be right for the other regardless on what the house market is doing. Certainly with rates increasing there are opportunities for FTB to negotiate on a property, and have the opportunity to buy a property that may have been out of the price range only a year ago. The interest rate, on paper is higher than we have been used to but if that monthly payment is close or lower than the increasing rents does it matter if the rate is 1 or 9%? The current problem with the market is the uncertainty and the constant changing of rates, as soon as we see 3-6 months of stable rates we will see a busy housing market for all buyers.