When to buy your first home
Buying your first home is likely to be one of the biggest financial commitments you’ll be making in your life so far. So, how will you know when is the right time to take the leap? Here’s what you need to know about the housing market now.
Will house prices come down?
House prices have increased over the past year, largely due to limited supply. Most experts expect that house prices will continue to rise over the next year, albeit at a slower pace. Despite this, data suggests that first-time buyers (FTBs) are prepared to spend £3,400 more on a property than they were last year*. For those buying outside of London, a 3-bed house is the most popular choice for a first home.
The cost of borrowing
Mortgage rates are predicted to fall incrementally in 2024 and beyond, in line with reductions to Bank Rate. Average rates have already come down in the last year, having reduced to 4.5% in September 2024 from 5.7% in 2023 (based on a five-year fixed rate mortgage with 75% LTV). However, it is important to note that, in the long run, experts expect that ‘the new normal’ mortgage rate will be between 3.5% and 4.5%**.
The recent improvement in mortgage affordability means that monthly repayments for a typical FTB have also gone down – from £1,076 to £9791. But, with FTBs opting for more expensive homes, they still require a higher income than a year ago to achieve their property dreams.
What are you currently paying?
The right time for you to buy a property will depend on your current circumstances. If you are renting, you may decide that you don’t want to delay purchasing a home, as the average rent for new lets went up by 5.4% in the year to July 2024. On the other hand, if you are currently paying little or no rent, you may wish to keep saving to maximise the deposit you could put down.
Your home may be repossessed if you do not keep up with repayments on your mortgage.