Hope for first-time buyers despite mortgage rate hikes
"For first-time buyers, there is a silver-lining, with house prices more or less standing still," says Moneyfactscompare.co.uk's Adam French.
First-time buyers have been given a glimmer of hope despite higher mortgage rates, it has been suggested.
Adam French, Head of Consumer Finance of Moneyfactscompare.co.uk, (pictured), says higher rates are “slamming the brakes” on what buyers can afford to borrow.
However, he adds that this has caused house price growth to stall, providing a ‘silver-lining’ to first-time buyers.
French explains: “Higher rates are slamming the brakes on what buyers can afford to borrow which has caused house price growth to stall.
“For first-time buyers, there is a silver-lining, of sorts. With house prices more or less standing still, the amount needed for a deposit isn’t racing ahead as quickly as it has in the past, giving them a slightly better chance to build their savings.”
For first-time buyers, there is a silver-lining, of sorts. With house prices more or less standing still, the amount needed for a deposit isn’t racing ahead as quickly as it has in the past.”
It comes after Lloyds revealed house prices remained flat last month, with average values standing at £299,253, compared with £299,396 in June.
Mortgage rates
French went on to point out that typical mortgage rates currently stand at 5.6%. It means a buyer purchasing an average-priced home with a 10% deposit will face monthly repayments of around £1,670.
The calculation is based on a buyer borrowing £269,327 across a 25-year term.
It translates roughly to £110 more a month than before rates were driven up by the conflict in Iran earlier this year, according to Moneyfacts.
Loan outlook
French adds that the rising rates have brought the challenge of meeting monthly mortgage repayments “sharply into view”.
“For borrowers it’s a case of hope for the best but prepare for the worst,” he says.
“Anyone planning to take out a mortgage within the next six months should consider securing a deal sooner rather than later to protect themselves against the risk of further increases.
“If rates do fall before their mortgage completes, they can usually switch to a cheaper deal.”
