May 21, 2013

David Gilman is the partner in charge of Blacks Connect

First-time buyers are back, according to figures released last week from the Council of Mortgage Lenders (CML), and the stats confirm something that many brokers have been telling me in 2013 – there is a definite spring in the step of the mortgage market.

The CML notes that first-time buyer activity in March increased by a significant 20% compared to February, and now accounts for a chunky 45% of all purchase loans – a good sign of increased confidence in the market, and that first-timers are finding it easier to arrange mortgage finance.

Government boost

One factor supporting this boost is the Government’s focus on getting the market moving with its Help to Buy scheme. It was good to read last week that two more lenders are set to announce deals this month under the shared equity part of the scheme. Builders are also reporting strong interest in Help to Buy the scheme and this demand could give them the confidence to start more desperately needed housing developments.

Like it or loathe it, the Help to Buy scheme offers FTBs a helping hand onto the ladder and could make all the difference to some wannabe homeowners. Along with Funding for Lending, which has driven down prices across the LTV bands, any measures that can make getting a mortgage and buying your first home more attractive will not only encourage FTBs, but help drive the entire market.

It’s no wonder lending to FTBs slumped during the credit crunch. With falling prices and wider economic woes crushing confidence, and lenders’ tight criteria dampening aspirations, there was little to encourage first-timers onto the ladder. And many are still scared, despite the pick-up.

Give them confidence

Anything that Government, lenders and the wider industry can do to allay the fears that firs-time buyers have about losing their money is helpful.

At Blacks Connect we are doing our bit to help buyers feel a little bit more confident about committing to a purchase. We now offer Buyer Protect – a protection warranty – free of charge as part of our standard disbursements package. It means that if the deal falls through for any number of specified reasons, the buyer will get certain costs refunded, including up to £500 in non-refundable lender’s mortgage fees, £600 in solicitor’s disbursement costs and £750 in valuation fees.

This extra layer of reassurance that their money won’t be wasted on a purchase that doesn’t complete is invaluable to first-time buyers, according to our broker partners, and it often means they are willing to instruct the survey more quickly.

Buying your first home is a very big deal and your clients have often been saving for a long time. Peace of mind that they won’t lose all the money they need to commit is often all it takes for them to jump confidently into their first purchase.

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