First time buyers are back, but should be prepared


It has been said over and over again that FTBs are in possession of key to the housing market- if interested get to know about them and much will follow. Estate agents in Islington are back, better and reloaded to serve those who want to own a home such as first time buyers.

From reliable data sources (Nationwide building society), it is clear that there were 73,700 FTBs who purchased homes in the third quarter of the year 2013 (Q3 2013) alone. These are the most recent figures which are available. These figures represent a 32% increase in numbers of homes purchased as compared to the same quarter in the year before - that is 2012. This must have been occasioned by a number of factors and most importantly bank rate adjustments to the lower side. It is always expected that as rates are lowered, many people and agents such as Bethnal Green estate will take advantage and this explains why there was an increase in Q3 2013.

At the moment, average earners who are interested in purchasing homes for first time, they can get them at a cost higher by 4.6 times. This is generally considered higher than the 20 year average of 3.6 times earnings and way below the highs of 5.4 which were recorded in the year 2007 said the society’s economist, Robert Gardner.

In most parts of the UK, house prices are up to 4% below what was recorded in the year 2007 peak. In addition a small rise has been recorded in what is referred to as nominal earnings by economists. Currently a typical mortgage takes up to 19% of the average monthly earnings of most borrowers. This explains why most people are able to go for mortgages as they do not stretch and stress their disposable incomes all the year long. This is good news to many first time home owners.

Nationwide building society goes further to clarify that this is below the 24% which was reached before the financial crisis hit the country. These figures are also slightly below the 20% long term average as recorded by the Nationwide. It is therefore evident that a decrease in interest rates automatically attracted many to buy homes.

However, Gardener says that complacency will not be tolerated and completes by issuing a warning to FTBs who have joined the ladder. He goes on to clarify that many people (more than a million) first time home owners have entered the market in a bid to get a home for their families. This increase in the number of people interested in owning their homes has been due to a cut in bank rates to 300 per year low which were arrived at in the year 2009. Since then, many of these buyers have not experienced a hike in bank interest rates and this is not expected in the near future. Mid 2015, the interest rate is expected to increase hence borrowers are advised to prepare adequately so as to counter the increase. After mid 2015, the rates are expected to stabilize hence achieve normal rates which will be attractive to all that is the FTBs and first time home owners among others.