What does a Post-COVID property market look like for first-time buyers?
In mid-June, the UK’s biggest building society, The Nationwide, made an announcement to triple the minimum deposit for first-time buyers, making this group of purchasers the most affected by the coronavirus crisis.
Prior to the June 11th statement, The Nationwide had been willing to lend up to 95% of the value of a new home, this amount of lending has now been reduced to 85%. For example, if a property costs £200,000, a new buyer would now need a £30,000 deposit rather than a £10,000 deposit.
The Nationwide has made this move got two main reasons; to prevent buyers going into negative equity, whereby the debt taken on by the purchaser is greater than the value of the property. Also, to alleviate the possibility of the purchaser falling behind, or not being able to make repayments on the mortgage – due to the loss of a job.
If you are a FTB (first-time buyer), looking for a mortgage, keep an eye on comparison sites to see what potential loans are available. It seems to be a given that borrowing money for a house purchase will become harder, post-COVID.
Despite The Nationwide’s risk-averse move, some lenders are still offering larger ‘loan-to-value’ mortgages, with the likes of HSBC still offering 90%. If you are a FTB (first-time buyer), looking for a mortgage, keep an eye on comparison sites to see what potential loans are available. It seems to be a given that borrowing money for a house purchase will become harder, post-COVID.
For FTB’s a larger deposit will almost certainly be the order of the day, so constantly access your finances as some of these larger loan amounts may not be around for long.Most importantly, be realistic about when you will be in a position to buy. The Bank of England base rate is historically low, so there are some great deals to take advantage of for those that do have that sought-after ‘healthy’ deposit.