2023 Is The Year For First-Time Buyer Mortgages

by | Friday 6th Jan 2023 | Mortgage News

2023 is shaping up to be a great year for first-time buyer mortgages

2023 is shaping up to be a great year for first-time buyer mortgages (Source: www.nationaltoday.com)

Yes, you did read that headline right. No, we aren’t completely out of our minds. Just hear us out…ok? 2023 is the year for first-time buyer mortgages and purchases in general. This might sound like a strange conclusion to come to if you have been following the mortgage or property market over the last few months. News outlets have peddled story after story about the bleak outlook of the mortgage market and property market, and who can blame them really? The economy has taken a massive hit recently and mortgage lenders pretty much shot themselves in the foot by increasing rates to ridiculously high levels. But, 2023 is shaping up to be a much better year, especially for first-time buyers.

Why Is Getting A Mortgage In 2023 A Good Idea For First-Time Buyers?

The first and most important thing to note is that rates are coming back down. When they went up to 6%, 7%, 8% in 2022, no one could really accurately predict when rates would come back down or by how much. But we are rele3aved top see that rates of 3%, 4%, 5% are now available with most lenders for most types of borrowers. And who knows? Maybe we could see sub 3% rates in the near future? Of course these rates are much higher than we were used to over the last few years i.e. 1% or something similar. However, these rates available now are closer to a normal level, with 1% being incredibly low.

This is where I believe a misconception is made by a lot of first-time buyers, first-time buyer mortgages of course need to be manageable and affordable for the borrower. You want to keep your costs down as low as possible so that you can eventually upscale your property but a rate increase has given the impression that mortgages will become unaffordable for everyone. Which simply isn’t true. In fact, renting a property is still on average more expensive than getting a mortgage per month and a lot of first-time buyers could easily afford the monthly mortgage payments.

Hypothetical First-Time Buyer Mortgage Figures

Let’s take a look at some hypothetical mortgage figures compared to rental figures. How much would you expect to pay in rent per month? For a 2 bedroom house for example? £700 – £1,000? In areas like London this could rack up to 3 or 4 thousand a month, without bills! Now let’s look at the average value of a 2-bed house in the UK. According to report carried out by affirmative finance, the average price of a 2-bed house in the UK in 2022 was £255,000. With a standard deposit of 10% (£25,500) you would need a mortgage of £229,500.

Most first-time buyers are around the age of 30 nowadays which means that first-time buyer mortgages can be taken for as long as 40 years potentially, bringing the monthly cost down. Taking a 40 year mortgage term and securing a rate of 4.5% or below (which is very possible in 2023) could mean that you pay a maximum of £1,032 a month for your mortgage. This figure will drop if you get a lower rate or put down more deposit. So as you can see, it still makes sense for first-time buyers to get a mortgage and rates are only dropping further.

Average Price Of Property UK Dropping

You may have seen in the news recently that the average price of property in the UK is dropping. This is true. And this is a positive for first-time buyers in our opinion. Due to economic struggles and the chaos caused by rate increases, interest in buying property has dropped and subsequently the competition for property once pushing prices to unheard of levels, has not depleted. It is becoming more difficult for people to sell their properties and people are beginning to reduce the asking price of their homes. how long will this last for? We don’t know for sure, but what we do know is that 2023 will be a good year to snap up a property for bellow average prices.

Getting On The Ladder With The Help Of A Mortgage Broker

If you are a first-time buyer looking to potentially purchase in 2023 it is important to speak to an advisor first, as navigating the mortgage market is still a minefield. Lender affordability and stress test have become more tricky and securing the right amount of lending in a timely manner should be a priority. With the help of Oportfolio, you will get the best mortgage deal possible on your dream home, quickly and stress free. Read our First-Time Home Buyer Questions To Ask A Mortgage Broker or contact our Putney mortgage team today to see how we can help you make your dream of home ownership a reality.

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