The combination of government programmes, improved employment opportunities, and heightened access to mortgage financing has created the best condition for first time buyers (FTBs) with small deposits to buy homes since before the pandemic, according to industry experts.
Several policies, including Help to Buy, the Stamp Duty Land Tax holiday, and the mortgage guarantee scheme have served to significantly enable FTBs to take their first steps onto the property ladder. Regulated property buyers GoodMove found data indicating that 39 per cent of UK FTBs have taken advantage of the stamp duty holiday. Moreover, an additional 8 per cent who are planning to buy a home, but haven’t done so yet, plan to use the extension.
Despite the difficulty of several lockdowns, new research from Yes Homebuyers indicates that recent restrictions on movement assisted nearly a third (27 per cent) of new UK property owners. For nearly half of this cohort, 46 per cent, curbs on social life significantly reduced spending; whilst for 33 per cent, working from home meant reductions in commute related costs, improving savings.
The recent unemployment rate - for November to January - was 5 per cent, according to the Office for National Statistics (ONS). This is much better than forecast by many economic experts, with the furlough scheme protecting over 11m jobs since the pandemic began. There were 4.7m workers on furlough in January according to government data, with the scheme due to continue until the end of September.
Given the average London first time buyer spends £489,098, according to Halifax, a 95 per cent LTV loan would mean a minimum deposit of just under £25,000. Outside London, in nearby commuter town Luton for instance, a £220,000 Lu2on property requires just £11,000 as a 5 per cent deposit.
Residential transactions soared 48 per cent in February, year-on-year, as a result to their busiest in 14 years with buyers attempting to beat the original stamp duty holiday deadline. Given the selection of fiscal supports, mortgage products, a growing economic backdrop and forced savings induced by recent lockdowns; first time buyers, particularly those with small deposits, are as well positioned to buy a home as they have been since the advent of the Covid-19 pandemic.
the provisional non-seasonally adjusted estimate of UK residential transactions in February 2021 is 122,840, 48.3% higher than February 2020 and 26.4% higher than January 2021