Amidst an already feverish property market, the ticking clock of the stamp duty holiday is set to turn the heat up further as
the 69 day time period left is just under the 77 days that the average property purchase takes to complete.
According to new research by price comparison website, MoneySuperMarket, the average purchase for a first-time buyer takes 99 to complete; home movers take 88 days to complete; while those re-mortgaging take 71 days. The result is that many buyers in the early stages of purchase will likely be in a rush to complete on their new home.
The scheme was originally scheduled to come to an end in March but was extended to 30th June in the Chancellor’s March budget. The decision sparked a 421% increase in mortgage enquiries on the MoneySuperMarket site, with 90% loan to value deals representing 39% of this figure.
The holiday extension has proved popular: 63% of home hunters are in the market as a result of the scheme. 25-34-year-olds are the most likely to take advantage of it, with 71% having bought a home or claiming that they intend to do so as a result of its introduction.
Government’s 95% mortgage guarantee – situation improving for first-time buyers
The same research by MoneySuperMarket also reveals an increase in the number of 95% LTV mortgages on the market. 70 deals are currently available, up from 12 at the start of the year – a 483% rise - though still down substantially by 67% on the 214 deals that were available to home buyers in January 2020.
The government’s launch of its 95% mortgage scheme on Monday received a favourable response from the industry with many large lenders announcing that they would be releasing new products this week or early next month. Interest in the scheme has also been matched by consumers with MoneySuperMarket seeing a 71% uplift in enquiries for first-time buyer 95% mortgages in the seven days between 12/04/2021 and 19/04/2021 when the announcement was made.
2-year v 5-year fixing
Fixed-rate mortgages continue to receive the most interest from visitors to MoneySuperMarket’s site, with 2-year fixed rate deals more popular than 5-year fixed rate deals with first-time buyers, those looking to re-mortgage, home movers and buy to let purchasers.
After the end of June deadline, the nil rate band for stamp duty will be set at £250,000 – double its standard level – until the end of September. From 1 October the usual level of £125,000 will return.
Jo Thornhill, finance expert at MoneySuperMarket, commented: “The stamp duty holiday extension has been hugely popular but those seeking to take advantage of it better hurry with the deadline now only ten weeks away. With the average home purchase taking 77 days to complete, many will be cutting it fine. However, if you’re chain-free and have only just started looking, you should still have enough time if you act now.
“Our research shows that the situation for first-time buyers is slowly improving: there are significantly more 95% LTV deals on the market than in January and, following the start of the government’s new 95% mortgage guarantee scheme on Monday, the availability of mortgages for buyers with a 5% deposit looks set to increase.
“While we welcome the government’s moves, there remains a long way to go if we’re going to see a reduction in the challenges that exist for first-time buyers. We’d like the government to think about long term solutions for making homeownership a reality for more Brits, particularly those who think it is out of their reach.
“As the current economic environment remains uncertain, it comes as no surprise that the most popular mortgages are fixed, with homeowners opting for 2-year deals in greater numbers than 5-year deals – something which suggests people are more content to hedge their bets in the short term.
“Whether you’re a first-time buyer or home mover, you can use MoneySuperMarket’s mortgage comparison tool to compare what deals are out there and which might be the best fit for you. You can also use the MoneySuperMarket stamp duty calculator to calculate how much you could save during the stamp duty holiday.”
Top tips for first-time buyers:
Understand your budget
It’s important to understand your budget to know what you will be able to afford. Comparing mortgages can help you get an idea of how much you might be able to budget for. You’ll be able to compare the monthly mortgage repayments you’d have to make for each deal as well as information on any extra moving fees you’d have to pay, and how flexible the mortgage is.
Decide what mortgage is right for you
When comparing mortgage deals, you will need to decide whether you want a mortgage with a fixed or variable rate. With a fixed-rate mortgage, your monthly repayments will stay the same for the length of the deal, making it easy to budget. With a variable rate mortgage, your monthly repayments can vary according to what happens to interest rates set by the Bank of England.
Do your research
Once you know your spending limits, you can start looking for properties. Start by researching the area that you’d like to buy in, taking into account house prices, proximity to local schools, public transport links and anything else that could affect your decision.
Once you’ve decided on an area, contact estate agents and search the internet to find a shortlist of potential homes, then set up viewings as soon as you can.
Boost your chances of getting a mortgage
Once you have an idea of the property and mortgage you want, now is time to boost your chances of being accepted. For first-time buyers with smaller deposits, many lenders have pulled what they deem to be higher-risk deals. To give yourself the best chance of securing your first home, it’s important to make sure you have at least a 10% deposit.
It’s important to check your credit score before applying for a mortgage to make sure this is up to scratch. A better score could unlock a wider choice of deals so it’s a good idea to spend the time practising small financial steps to improve your score. This can sometimes be as quick and simple as making sure you’re registered on the electoral roll and closing any credit cards or accounts you don’t use anymore.
Remain calm
If you’re still feeling a little out of your depth when comparing mortgages, remain calm and speak to a mortgage broker who will be able to advise you on which deals suit your needs best.
