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First-timers: Equity release interest and a smaller mortgage is cheaper than a high LTV deal – Marketwatch

  • 19/06/2019
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After many years in the doldrums, first-time buyer numbers have picked-up noticeably this year.


According to UK Finance figures earlier this year, this group reached a 12-year high in completions.

So given this and other positive sentiment around the market, Mortgage Solutions asked our panel what the reason behind this rise is, and if they expect the trend to continue this year?


Andy Wilson, founder of Andy Wilson Financial Services

We are also seeing an increasing number of first-time buyers. The reasons for this seem to be varied.

Many are using new build Help to Buy, and the Lincoln area is seeing a lot of new housing developments.

Our borrowers are also aware that the Help to Buy scheme will be withdrawn relatively soon with no indication of a replacement, so now is the time to move.

Others are using the Help to Buy ISA funds. Couples who started ISAs in December 2015 and have paid in the maximum can now receive free government money of £3,000 towards their deposit.

In 12 months’ time even sole buyers will be able to do so, having paid in the maximum qualifying sum of £12,000.

Some first-timers have received parental or grandparental help with deposits.

We have arranged a number of equity release cases to help with this.

Where the applicants can afford to also pay the interest on lifetime mortgages the total payments on both mortgages is less than if they took a higher loan to value (LTV) house purchase mortgage at a higher interest rate.

I believe there is a good deal of confidence in this market now, with fears over Brexit subsiding. Many we speak to do not care much about the possible effects of Brexit, simply because no-one seems to know what will happen.

Any fears over interest rates rising can also be alleviated by using a five-year fixed rate to ride the borrowers through uncertain times – the pricing for five-year deals is very close to two- and three-year deals, which was not previously the case.

I see no reason why the numbers of first-time buyers will not be sustained over the next six-to-12 months unless Brexit serves up a curve ball.


Jeni Browne, sales director at Mortgages for Business

It’s the perfect storm for first-time homeowners at the moment, with more reasons than ever to buy their first home.

Those who may have been put off taking the plunge by Brexit, will be encouraged to act sooner than later by first-time buyer Help to Buy incentives either ending or being restricted in the next few years.

Mortgage lenders are now creating more products with 90-95 per cent loan to value ratios, so these first-time buyers need less of a deposit than in recent times, making their dreams a bit more in reach.

The slow housing market, largely due to the political uncertainty surrounding Brexit, makes it an excellent time for house buyers with no property to sell, enabling them to get houses at a lower price.

It’s also now that the impact of George Osborne’s tax restrictions from 2015 are really biting the buy to let sector. The more amateur landlords selling-up has increased the number of lower level properties available.

This opens-up more houses for first-time buyers at the lower price point.

Over the next six months I predict that this trend will continue if Brexit remains at a stalemate.


Dave PinningtonDavid Pinnington, director of intermediary relations at Finance 4 Business

I think the answer is quite simple, 12 years ago we were at the start of an ominously dark period of recession, the mentality of “if you have a pulse, we’ll lend” era ended overnight and the slow recovery began.

It understandably took lenders a while to feel comfortable raising the LTV’s back to 95 per cent and we’ve in more recent years seen the introduction of the government’s Help to Buy initiative.

Add these two factors together and include a consistently growing population and the lowest unemployment rates since 1974, it’s not difficult to see why based on 12 years ago this market is at such a high.

And where do we see this heading in the next six months? It’s time to polish off the crystal ball.

With the very recent change in Conservative leadership and the fast approaching “final” Brexit deadline, who knows what lies in store, not just for the first-time buyer market but for everyone else.

I’m a great believer in you can only deal with the here and now, on this proviso I’d say the market will remain buoyant, caveated with the fact that a bunch of egotistical maniacs are capable of ruining this in October.



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