Some brokers have sensed a “fear” among borrowers in the market which has prompted some to ask them whether they can extend the overall term of their mortgages to bring these payments down.
“We’re finding that while first-time buyer cases are proceeding, there is more fear around affording monthly payments,” Sophie Foreman, an adviser at Woldingham Financial Services, explained.
“We are needing to ensure our clients understand the implications of this, in terms of paying more interest in the long run.
“Generally, we’re also getting more inquiries from clients with credit card loans who are then facing affordability issues.”
In Scunthorpe, adviser Bob Riach said he has not seen any drop in new home purchases due to the ongoing shortage of housing stock.
"Driving around last weekend all but one sale board had a sold sign," said Riach.
Uptick in shared ownership and HTB interest
With tightening affordability calculators posing a challenge to deposits and monthly repayments, there has been an uptick in first-time buyers making use of alternative routes to buy a home, with advisers reporting increases in applications for shared ownership and Help to Buy.
Jane King, chartered adviser for Ash Ridge Financial Services, said she has been processing an increasing number of shared ownership applications.
“I expect to see much more of this,” said King.
“It requires less of a deposit and a smaller mortgage. Plus, it's not just for first-time buyers so anyone can apply.
“I know a lot of people hate shared ownership but I think it's a great product as long as the buyer understands how it all works.”
Jingree said she has also seen “a flurry of Help to Buy applications” before the scheme ends on October 31. “Many first time buyers are asking what will replace it,” she said.
L&C Mortgages director, David Hollingworth, reckons as Help to Buy comes to an end and pressure on mortgage affordability grows, other options such as shared ownership “look like they could play an important role in future”.
“Those that had been in the process of saving for a deposit and starting to search for property are bound to be considering their options now, as they recalibrate what their mortgage option might be from both a rate and affordability perspective,” said Hollingworth.
“That’s likely to see them step back and take a breath to wait and see how things pan out in terms of the mortgage market and house prices, which are expected to soften.”
ruby.hinchliffe@ft.com
