The financial challenges facing millennials are well publicised, particularly when it comes to the cost of buying a home. However, experts are now saying that now could be a “great time” for first time buyers.
Thanks to a sluggish buy-to-let market as a result of the government’s tax crackdown along with a slowing home mover market, the housing market is currently being propped up by first time buyers.
Interest rates are still low
Despite 2017’s interest rate rise of 0.25%, interest rates are still extremely low. With so many affordable deals available, this is an ideal time for first time buyers to take their first steps on the property ladder. Economists predict that another interest rate rise could be on the horizon, suggesting home buyers would be wise to lock themselves into an affordable fixed rate deal while they’re available. By securing a fixed rate mortgage of two, five or even ten years, new homeowners can protect themselves from interest rate rises and keep their mortgage repayments affordable.
The Help to Buy ISA can help first time buyers boost their savings
More than a million first time buyers have used the government’s Help to Buy ISA since its introduction in 2015. The cash ISA rewards budding homeowners for saving for a deposit by boosting their deposit savings by 25%.
Savers can place up to £200 a month into the account (with the exception of the first month when they can save £1,200), up to the value of £12,000. When they’re ready to purchase a property, they’ll receive the government bonus. If a saver was to put aside the full £12,000, they’d benefit from £3,000 from the government.
Stamp duty has been eliminated for most first time buyers
Last year Theresa May revealed that first time buyers would no longer pay stamp duty providing they’re buying a property worth less than £300,000. Those purchasing a home priced between £300,000 and £500,000 won’t pay any stamp duty on the first £300,000 but will pay 5% on the remaining amount.
In the months since the change was introduced, thousands of first time buyers have saved an average of £1,700 in home-buying costs.
