Will first time home buyers benefit from Brexit?
Brexit, despite not even being in full flow yet, has had a huge effect on the property market in the UK. This is especially the case in London, where prices have been falling rapidly.
The Brexit referendum has caused a lot of uncertainty for the property market and in other industries too. However, could the falling prices be positive for first-time buyers? It is obviously very negative for current homeowners who want to sell their homes during this time, but what about if you are moving from rented accommodation, and therefore own no property, into a property which is to be purchased by yourself?
It is true that before the result of the Brexit referendum, many had predicted that a vote to leave the EU would depress the housing market, but in fact, benefit first-time buyers. However, this may not have come true now that Brexit is only months away without a deal in place.
Current Homeowners and Brexit
A report conducted by Unbiased named “Buying a Home in Brexit Britain”, found that many people were becoming very cautious when it came to buying and selling in Brexit Britain.
The survey, of 250 UK adult, which was done concluded that there were clear signs of the uncertainty of the market. Around 15 per cent of current homeowners believed that the value of their property had gone down as a result of the ‘leave’ result of the Brexit vote. Half as many believed that the value of their property had actually increased as a result.
1 in 5 people questioned who were planning on moving houses in the coming year said that they did feel a sense of pressure to sell their property fast.
Prices Falling and the Benefit for First Time Buyers
Interest rates on mortgages are now at record lows and therefore a more affordable mortgage is finally a reality for people. However, the irony of low-interest rates is that they will make it all the harder to grow savings. Thus, too many would-be buyers simply will not be able to raise a large enough amount for a deposit for the property they wish to purchase.
There is actually no shortage of people who want to get themselves on the property ladder. But at this point, it is merely a dream rather than a reality for those who are living in the capital, especially.
The report from Unbiased went on to find out that only one in ten prospective buyers sees a realistic chance of getting on the property ladder at all, which is a pretty devastating statistic. This in itself could slow the property market, and maybe even be a large player in the drop in house prices. It is not that people are not wanting to buy, it is that they feel so uncertain that they feel they can’t.
The Silver Lining
It is not all doom and gloom! However, despite early predictions, it does not look as of yet that the Brexit result will make buying your first property any easier. In the current climate, any slack at the lower end of the market is being dominated by those who are buying to let.
Meanwhile, more homeowners are planning to extend their mortgages rather than move. This may well be a sign that they would rather not sell in such an uncertain climate.
For anyone is trying to get onto the housing ladder, there is a ray of hope. Several mortgage providers are now offering 100 per cent mortgages to keep up with the demands of the market. Basically, what this means is that these mortgages do not require any deposits. There are also some providers which are offering very long-term fixed-rate deals of up to ten years.
The fact remains that interest rates have never been so low, so such deals present a unique opportunity for first-time buyers.
If you want to sell your property quickly and move into a new property the effects of the Brexit hit, but you do not have time to wait for a mortgage to clear, why not try a Bridging Loan.
They essentially work to bridge the gap between the sale and the mortgage coming through, giving you the flexibility to move when you like.