Richard Adams is managing director of Stonebridge Group
I write this prior to the Budget and it might well be that the speculation surrounding what the Chancellor, Philip Hammond (pictured), could announce will not actually come to fruition, however it appears that this is likely to be a very first-time buyer-friendly Budget.
Now, potential first-timers who’ve not been able to get on the ladder yet, might think whatever is announced won’t be good enough, however, with the extra £10bn funding for the Help to Buy Scheme already detailed at the Conservative Party conference, and the rumour mill working overdrive that stamp duty will be cut for those buying their first properties, these could be two significant positives.
Certainly when it comes to changes in stamp duty – perhaps a holiday period for first-timers or (just as likely) an increase in the current thresholds in England to keep them more in line with Wales & Northern Ireland – then there could be some significant savings to be had.
That said, it has to be acknowledged that without big increases in affordable housing supply, those looking to buy for the first time may still be left hoping rather than achieving.
There are of course other significant barriers to overcome that look unlikely to change anytime soon, the biggest remaining the deposit requirements that come with today’s house price levels, and leave those who cannot fall back upon a ‘Bank of Mum and Dad’ struggling to reach the levels required.
Add in the still poor supply of 95% LTV mortgages, and it is no wonder why many revert to renting and put buying a home on the back burner.
However, for advisers wishing to target this demographic there is still some hope – for instance, the latest statistics from UK Finance suggest the average age of a first-timer is 30, perhaps slightly less than some might have feared, and with an average loan size of £139,000 one would hope that lenders have product availability which can cater for these potential borrowers, even if the average LTV remains stubbornly in the low 80s (82.9%).
We therefore await the Budget with interest – especially if it coincides with action on student loan repayment – and advisers might well be advised to prepare their first-time buyer marketing material in order to capitalise in any increase in interest, and/or ability to borrow.