First-time buyers still seeking mortgages
Released
on: October 3, 2008, 9:03 am
Press
Release Author: Thinkmoney.com
Industry:
Financial
Press
Release Summary: Despite the issues in the housing and mortgage
markets, many thousands of people are still going ahead and buying
their first property.
Press
Release Body: As experts name 2010 as the year house prices may
start to recover, financial solutions company Think
Money points out that buying a home is still widely
regarded as a positive move, with 17,300 loans granted to first-time
buyers in July, according to Council of Mortgage Lenders figures.
Despite
the difficulties in the mortgage market, and despite worries about
the future of house prices, recent research carried out by the
Co-operative Bank and Places for People
revealed that the majority (54%) of first-time buyers questioned
felt that renting was ‘throwing money down the drain’.
“Whatever
issues the housing and mortgage markets is facing,” said
a Think Money spokesperson, “it seems British
consumers are still very much aware of the benefits of homeownership
– and the drawbacks of the alternatives.”
However
worrying the thought of losing money on a property, it’s
important to remember that the alternative isn’t free: “While
homeowners face a possible (or in today’s market, probable)
loss on their property, anyone renting a property can be certain
their rent money is gone for good. Plus, the cyclicality of the
housing market means a homeowner’s loss is likely to be
only temporary, as long as they’re not forced to sell before
house prices recover.”
These
factors go a long way toward explaining why so many tenants remain
determined to become homeowners despite the troubles in the mortgage
market.
“Assuming the Nationwide Building
Society’s chief executive Graham Beale is right and we see signs
of recovery in the housing market in 2010, it clearly makes sense
for would-be first-time buyers to keep a close eye on house prices,
the mortgage market, and available
properties. It’s true that they may be able to buy for a lower
price if they wait longer, but it’s also possible that house prices
will pick up sooner and faster than anyone expects, in which case
they could end up ‘missing the boat’ and paying more.”
Furthermore,
recent data from the Council of Mortgage Lenders reveals that
the average first-time buyer is laying down a deposit of over
£19,000 – 15% of the property’s value. “This
is an interesting figure, for two reasons,” the Think Money
spokesperson commented. “First, it indicates that the average
first-time buyer is buying a property now worth around £125,000.
Second, if (as Graham Beale predicts) the peak-to-trough drop
turns out to be around 25%, an average ‘first-time buyer’
property could drop further, to around £105,000.
“These
are only approximate ‘ball-park’ figures, but that
£20,000 drop from today’s prices is only around £5,000
more than the cost of spending £600 per month on rent for
the next two years.
“Although
£5,000 is a lot of money, it seems many first-time buyers
do see this as a price worth paying to own a property which should
then start appreciating in value. For thousands of tenants, the
problems in today’s housing market clearly represent an
opportunity to get a foot on the housing ladder which they don’t
feel they can pass up – as long as they can find a mortgage.”
Web
Site: http://www.thinkmoney.com
Contact
Details: Melanie Taylor
Thinkmoney.com
Pennington House,
Carolina Way,
South Langworthy Road,
Salford Quays
M50 2ZY
http://www.thinkmoney.com/mortgage/
2012
