Now, throw in some additional challenges generated by high levels of inflation, hikes in mortgage rates, heightened affordability issues and you could be forgiven for writing off this sector.
However, despite this catalogue of challenges, data from Rightmove showed that first-time buyer activity is recovering as annual price growth slows. Over two weeks in early March, analysis from the property portal suggested that agreed first-time buyer sales were just four per cent behind the same period in 2019, although these figures were still 18 per cent adrift of last year’s level.
The result of this increased buyer activity means that average asking prices for first-time buyer type properties are now just £500 lower than their peak last year. A figure which continues to demonstrate just how much financial support is required from family members when it comes to raising a significant deposit.
The valued support of a broker
The intermediary market can certainly hold its head high for the part it plays in helping first-time buyers to weave their way through an increasingly complex mortgage process, especially in light of recent political and economic events which have certainly provided their fair share of bewilderment and confusion.
We’ve seen a variety of predictions as to where the housing market and mortgage rates may go from here in recent months, with advisers using their expertise and experience to successfully help clients filter this noise. Although a multi-faceted and sometimes antiquated homebuying journey still has many twists and turns which can often leave potential buyers somewhat unsighted or ignorant to certain aspects of this passage.
Arguably one of the simplest but still one of the most misunderstood parts of this journey is the difference between a valuation and a survey. Regular anecdotal feedback we receive indicates that a worryingly large number of people don’t understand the purpose of a survey and rely on a mortgage valuation to uncover any issues with the property they are looking to purchase.
How surveys and mortgage valuations differ
A survey is a detailed inspection of a property that is conducted by a qualified surveyor. It is typically more in-depth and comprehensive than a mortgage valuation. This is often recommended for older properties, properties that have been extended or modified, or properties that may have structural issues.
A mortgage valuation, on the other hand, is a basic assessment of a property that is carried out by a valuer or surveyor on behalf of a lender. Its primary purpose is to provide the lender with an estimate of the value of the property so that they can determine how much to lend to the borrower.
A mortgage valuation is less comprehensive than a survey, it only covers matters which a lender wants to know about and does not delve into any potential issues with the property that do not impact a lender’s decision to lend. Matters critical to a buyer’s decision to buy are not part of the mortgage valuation.
For this reason, a survey should always be commissioned.
An offer of a mortgage is not confirmation of whether a property is free from issues or that a human has inspected it.
For advisers who are operating in a hugely complex market on a daily basis, it can sometimes be easy to assume that their clients are aware of the difference between a valuation and a survey, but the fact remains that a high proportion are not. And this is a message which needs to be conveyed as early in the homebuying process as possible to ensure that first-time buyers everywhere are armed with the right information to help protect the largest financial decision that they are ever likely to make.
