Coronavirus and first time buyers

How Coronavirus Affects First Time Buyers

It’s been clear from Day 1 of lockdown that there would eventually be some type of impact on mortgages – both existing loans, those in progress, and new mortgages. Unfortunately, it seems that the mortgage slowdown will disproportionately hit first time buyers across the UK.

Now that the property market is once again open in England, those on verge of starting their journey up the property ladder back in March might wonder: is it still possible to buy your first house?

Here’s what’s changed for first time buyers.

Fewer Mortgage Products Available for First Time Buyers

Over the past six weeks, banks have yanked thousands of mortgage products off the market. The lack of products has hit refinances dramatically. But the lack of choice will directly impact new buyers as well.

A report from showed that there were only 30 deals available for buyers that allowed for a 5% mortgage deposit. Even 15% deposit deals have fallen from 677 on March 19 to 251 by May 19.

What’s more, many lenders won’t accept furloughed customers, even if they have the deposit. It will take more work to secure a mortgage if your job situation has changed at all.

Meanwhile, house prices haven’t dipped in England at all. The typical national asking price for a home typically chosen by first time buyers is £241,891.

According to Rightmove, the average price for a property in Northampton is £239,151 .

What does that mean for you? It means that homeownership could still be months or years away, even if it was within reach back in March.

Deposits Don’t Go as Far as They Did Six Weeks Ago

What does the change to mortgage offerings mean in practical terms?

If you were saving for a 5%, 10% of 15% deposit, you may no longer find a deal that you qualify for or that offers the right rates. You may need a minimum of 15% or even 20% available before you qualify for a new loan.

Of course, that means different things for different people. According to Rightmove, those buying in London will be worst affected where a jump from 10% to 15% is an average of £47,757 up to £71,635.

Those buying in areas that hover around the national average home price, as Northampton does, will see their deposit requirement jump from around £24,000 (10% down) to £36,000 (15% down).

Is Now the Best Time to Buy a House?

If you’re a first time buyer, you might wonder if now is the best time to be buying a house. The answer is “perhaps not yet.” There are no bargains to be had at the moment. Property prices aren’t lower – at least not yet. And locking yourself into a less than desirable mortgage could have real consequences later, particularly if your income is threatened by the continued economic instability caused by the pandemic.

However, lenders have started to restore loan offers and loosen lending conditions. While today might not be right, first time buyers certainly to keep an eye on as the summer progresses.

Are you a first-time buyer in Northampton and wondering about your mortgage options? Derngate Wealth Management can help you navigate your options and put your best foot forward. Get in touch by filling out our enquiry form or giving us a ring on 0800 612 9031.


By clicking on these links you are now departing from the regulatory site of Derngate Wealth Management. Neither Derngate Wealth Management nor Quilter Financial Planning are responsible for the accuracy of the information contained within the linked site. [Information correct as of 17th August 2020]

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