First Time Buyer Spring Update - What Has Changed Since January

If you have been doing your homework on buying your first home since the start of the year, the picture you saw in January is not quite the picture you are looking at now. The mortgage market has had what you might politely call an interesting few months, and whilst none of the fundamentals have changed, several of the practical details that affect what you can borrow and what it will cost you most certainly have. So here is a proper update on where things actually stand if you are planning to buy your first home in the coming months.

What Has Actually Moved

The Bank of England base rate currently sits at 3.75%, but more importantly for fixed rate mortgages, swap rates have been on something of a rollercoaster since March. When the Middle East situation escalated, lenders rushed to price in the possibility of base rate rises, and fixed rates climbed accordingly. Then a ceasefire calmed things down, swap rates eased, and lenders including Nationwide, HSBC, Halifax, Santander and TSB started cutting rates again throughout April and into May.

So the rates available to you right now are noticeably better than they were a few weeks ago, but most market commentators are warning that these cuts could slow or even reverse if the wider picture changes. In other words, if you see a rate you like, it is genuinely worth moving on it rather than waiting to see what happens next week.

95% Mortgages Are Available, But the Pricing Has Shifted

If you are buying with a 5% deposit, the good news is that 95% loan to value mortgages are still very much available, with two year fixed rates currently sitting in the high 5% range from various lenders. The less good news is that the gap between what you pay at 95% LTV and what you pay at 90% LTV remains significant, which means even a small additional deposit can make a meaningful difference to your monthly payment.

If you are sitting on the boundary between 5 and 10% deposit, it is genuinely worth looking at whether saving for another few months puts you in a measurably better position, or whether the rate of house price movement in your target area means waiting actively costs you. There is no universal right answer here, which is exactly the kind of situation a proper conversation with a broker is useful for.

Affordability Rules Have Not Changed, But Your Numbers Might Have

Most lenders will offer between four and four and a half times your annual gross income, with some going up to five or even five and a half times for first time buyers in specific circumstances. Those headline multiples have not really shifted, but inflation running at 3.3% means your everyday outgoings have probably crept up since you last did the maths, and lenders look very closely at bank statements to assess what you can genuinely afford to repay.

Subscriptions, gym memberships, food delivery habits and the occasional weekend away all add up in the affordability calculation, and what looked comfortable in January may look slightly tighter now if your spending has drifted. Worth taking an honest look at the last three months of your statements before you start making formal applications.

 

Get Your Agreement in Principle Sooner Rather Than Later

An Agreement in Principle, sometimes called a Decision in Principle, is the lender saying that based on what you have told them, they would in principle lend you a certain amount. It is not a formal mortgage offer, and it does not commit anyone to anything, but it tells you what you can realistically afford and it tells estate agents that you are a serious buyer rather than someone window shopping at the weekend.

In a market where rates can shift in either direction within weeks, having an AIP in your back pocket means you can move quickly when the right property appears, rather than scrambling to put your finances in order whilst someone else makes an offer.

The Schemes That Are Still Worth Knowing About

First time buyer stamp duty relief still applies on properties up to £300,000, which can save you a meaningful chunk of money depending on where you are buying. Shared ownership remains an option in many parts of the country, and various lender specific schemes including family assisted mortgages and joint borrower sole proprietor arrangements can stretch your borrowing capacity if you have family willing to help without giving you the deposit outright.

None of these are right for everyone, and some have catches that are easy to miss if you are looking at them in isolation, which is precisely why having someone walk you through the options properly makes a real difference.

If You Are Thinking About Buying This Spring or Summer

If buying your first home is on the agenda for the next six months, get in touch and we can have a proper conversation about where you are, what you can realistically borrow, and what you should be doing now to put yourself in the strongest position when you find the right place. No pressure, no jargon, just a straightforward chat about your situation and your options.

 Barry, The Mortgage Network - Helping first time buyers make confident decisions and plan a mortgage that works for you.

YOUR HOME MAY BE REPOSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE