Single FTB’s virtually priced out
It is predicted there will be an extension to the government’s mortgage guarantee scheme. Rightmove suggests more options could be considered to help single first time buyers.
New analysis from Rightmove (https://www.rightmove.co.uk/) reveals that single first-time buyers on an average salary and with a 5% deposit could not afford three-quarters of properties for sale in the typical first-time buyer market.
What are the homes in this typical first-time buyer market?
Firstly, Studio Flats.
Secondly One Bedroom Flats.
Thirdly, Two Bedroom Flats.
Finally, smaller properties that are a popular first step to getting onto the property ladder.
The criteria used.
Single FTB’s virtually priced out
The analysis is based on a first time buyer having a maximum budget of £164,810. This is based on being able to borrow £156,569 from a lender (4.5 times the average national salary of £34,793, ONS figure) and having a 5% deposit of £8,240.
Single first-time buyers in the capital are hardest hit, being able to afford just 2% of studio, one and two-bedroom properties with an average London salary and a 5% deposit, compared to the North East, where solo first-time buyers could afford 67% of properties. No wonder FTB’s are virtually priced out .
95% mortgage rates are usually higher than those for other LTV brackets. The lowest available five-year fixed 95% mortgage rate is currently 5.59%, while the equivalent lowest 85% mortgage rate is 4.99%.
Based on a budget of £164,810, a buyer with a 5% deposit would repay £970 per month over 25 years. Compare that with £818 per month for a buyer with a 15% deposit.
If extending the mortgage term to 35 years, this reduces payments to £850 per month with a 5% deposit. Compared with £706 with a 15% deposit.
However, for those able to buy with a partner, friend or family member, options greatly open up to those with a small deposit. A couple who are first-time buyers on an average salary could afford 70% of smaller properties across Great Britain with a 5% deposit, due to the increased borrowing power.
What does that mean for first time buyers looking to buy in Harlow?
It appears that the outlook for single first time buyers in Harlow does not look very good.
The average price of 1 bedroom properties are as follows:
CM17 £188,294
CM18 £163,998
CM19 £171,149
CM20 £176,892
Therefore, it is easy to see that as in the rest of the country, single first time buyers are being virtually priced out!