First time buyers don’t bother to shop around

Amanda Jarvis

November 25, 2004

Buying a first home is a huge step for anyone and choosing the right mortgage can be a daunting process. Unsurprisingly, a competitive interest rate is the most important factor amongst first-time buyers when choosing a mortgage, with nearly a third (30 per cent) saying that this influenced them most. Nearly two-thirds (63 per cent) of first-time buyers, however, admit to taking the first mortgage they were offered, without shopping around for the best deal, according to research from Abbey.

Under pressure from estate agents

Just over one third (35 per cent) of first-time buyers felt under pressure to arrange a mortgage quickly with the majority of them (24 per cent) saying their estate agent told them to act quickly or risk losing the property. Buyers in London felt the most pressure from estate agents (29 per cent) compared with 13 per cent in Scotland.

Buyers in the Midlands appear to be slightly more shrewd when choosing a mortgage – 56 per cent took up the first mortgage offered compared with the national average of 63 per cent. Contrary to their canny image, buyers in Scotland are least likely to shop around for the best deal, with 72 per cent taking the first mortgage offered to them.

Abbey’s research also reveals that first-time buyers in the south west (42 per cent) are most influenced by the best rate compared with only 21 per cent in Wales. New borrowers in the south west are also influenced by guidance from an financial adviser (25 per cent), compared with only 17 per cent of first-time buyers in the north west, who are the strongest believers that ‘family knows best’ – eight per cent of them say that advice from family and friends influenced their choice of mortgage.

Angus Porter, Abbey’s Customer Director said: “It’s alarming that the majority of first-time buyers take the first mortgage they’re offered. Even more worrying is that many of them feel pressurised into doing so. With the number of deals available these days, it’s more important than ever to take sound advice and shop around for the best mortgage for their needs.”

In spite of the majority taking the first mortgage offered, most first-time buyers (80 per cent) are happy with their choice. But, when asked if they’d do anything differently when choosing a mortgage in the future, a quarter (26 per cent) said they’d spend more time researching their mortgage options, focusing not just on the rate, but the whole mortgage offer. Fourteen per cent said they wouldn’t be pressurised by estate agents into acting so quickly when arranging a future mortgage.

A further thirteen per cent of first time buyers would take more time when viewing property and not rush in and buy the first property they see. One in ten (nine per cent) would also save more money for a bigger deposit, rising to nearly a fifth (18 per cent) in Northern Ireland but only five per cent in the south east – not surprising, given that property in the south east is the most expensive in the UK.

Even with recent increases in the Bank of England base rate, first-time buyers appear to be happy with their mortgage choice – almost two thirds (62 per cent) say they wouldn’t change their mortgage rate. Eighteen per cent say they’d change to a short-term fixed rate for some stability and one in ten (10 per cent) would even consider a long-term fixed rate of 15 years plus. Homebuyers in the north west are most likely to consider this (13 per cent) and those least likely to think about it are the Welsh (five per cent).

Sign up to our daily email