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First time buyers urged to make that first move now

As New Homes Week continues latest research suggests that conditions are ripe for first time buyers to take that first step onto the housing ladder.

Financial information busines Defaqto says that cheap borrowing and a levelling of house prices means that it’s a buyers market if you are looking to take that first step.

It says that high loan to value mortgages are at an all-time low rate but  first time buyers need to take advantage of Help to Buy ISAs now before they close to new savers on 30 November 2019.

With UK property price growth slowing in some areas it says the number of cheap high loan to value mortgages on the market increasing, and the government’s Help to Buy ISA scheme coming to an end later this year, now could be the time for first time buyers to make the most of the present market conditions.

High Loan-to-Value (LTV) mortgages, where a borrower can buy a house with a small deposit such as five per cent of the value and borrow the remaining 95 per cent, are typically used by first time buyers to get on the housing ladder.  Defaqto has found that interest rates have been falling for 95 per cent LTV mortgages. A year ago, the average interest rate on a two year fixed rate mortgage was 3.95 per cent and today it is 3.23 per cent.

Katie Brain, insight analyst at Defaqto, comments: “Buying a home is an expensive undertaking and for many years we have seen that first rung of the property ladder move further out of the reach of first time buyers.  Now, with stalling house prices and cheaper borrowing, we are entering a period of opportunity for buyers looking to make their first home purchase. However, if they wish to take advantage of the government’s Help to Buy ISA scheme, they are going to have to hurry.  Securing a 25 per cent bonus from the government is not to be sniffed at but this really is a ‘use it or lose it’ moment for first time buyers.

“For those looking to get a mortgage, it is important to do your sums and check exactly what you can afford to borrow. While interest rates are low, an increase of just one per cent can add hundreds of pounds to a monthly repayment and thousands to the overall cost of a home. It’s important to factor in what an increase could mean for your mortgage and whether you can afford it. If you need advice, talk to a qualified mortgage adviser who can recommend the best product for your needs.”