Homework for the First Time Buyer

There is no doubt that the mortgage market has changed and that lenders are expected to remain cautious, especially with first time buyers. In comparison, over the past year there have been many attractive rates available for existing mortgages holders to prevent switching.

For the new buyer the advice from Hamptons International (a leading property agent) is to be prepare, prepare, prepare; meaning that potential buyers must do their homework and consult an independent advisor. This may seem simple obvious but many buyers are still relying on published information which may mean that they are not: a) getting the best deal or b) prepared for the often arduous processes in place. This is ever so much relevant when it comes to overly competitive areas such as the London property market.

According to an advisor from First Action Finance it can be virtually impossible to fulfil a wish list of; a low rate, stability and flexibility from a mortgage provider unless you pay a large deposit and fee. Therefore when new buyers enter the market they need to make decisions about which variable is most important to them. Generally fixed rate mortgages (giving best stability) give the average rates and a compromise on flexibility. In comparison tracker rates may give the best rates but are by nature unpredictable which may put first time buyers off.

As the mortgage market develops it can be difficult navigating the way through the rates and products now available; hence why contracting an independent advisor will help select the right product for an individual. Due to the caution of the lenders, there are also stricter underwriting processes in place meaning that the applicant must have everything in order to complete; especially important when up against a cash buyer.

The good news for mortgage applicants that despite tentative lending there has not been a decrease in the amount of products available and overall mortgage lending volumes continue to increase. Despite the 2^nd Quarter showing house prices at average decline of 1.7% across Hamptons International’s network thus causing slight inertia among prospective vendors, there are indications that this will change as we move into autumn and winter.

GDP figures for the 2^nd Quarter increased by 1.1 percent, with 0.9% coming from the crucial private sector (results announced August 2010.) In conjunction with these results, many of the UK’s all important European trading partners have reported similar figures. In addition to this, consumer spending is well above economic forecasts thus indicating that there is confidence across the UK.

These favourable signals twinned with the steady level of mortgage products available show that the UK is adjusting to the ‘new normal’ property market. It is possible for first time buyers to get a mortgage in these conditions; they just need to plan accordingly and it is likely to become easier as the market evolves and the economy stabilises.