First time buyers are jumping into the property market

First time buyers are showing renewed interest in the property market as the latest figures from HMRC show a 0.5% increase in property transactions in March compared to February.

Whilst these figures appear encourging, the number of property transactions in March this year is actually 41% lower than in March 2016! This is not as alarming a collapse in sentiment as it sounds as the spike in transactions last year was caused by the rise in stamp duty for second homes and by changes to buy to let mortgage tax relief.

Handing over keys to a new house

This time last year, buyers were piling into the property market to beat these tax rises whereas there is considerably more caution in the housing market now, as buyers and sellers absorb the impact of Brexit and the snap election.

Ishaan Malhi, CEO and founder of online mortgage broker Trussle, explains:

“The market has picked up again, despite weakened demand from buy-to-let investors facing new tax and stamp duty rules. This is likely due to the increase in first-time buyer activity that we’ve seen in recent months. With a general election now on the horizon however, I expect activity may dip again as buyers and homeowners adopt the ‘wait and see’ attitude that we’ve seen in previous elections. This usually then leads to a bounce back in activity once the result is known.

“With interest rates still at rock-bottom levels for now, I hope that first-time buyers and people looking to move home don’t delay their decisions for too long. Locking in a good fixed rate now could potentially save them a lot of money in the long run.”

It is not surprising that first time buyers are finding the property market attractive at the moment, even with this political uncertainty, as there are some fantastic mortgage deals available, particularly for those who can supply a large deposit.

Yorkshire Building Society, for example, has recently announced a market leading mortgage product which is a two year discounted standard variable rate mortgage at 0.89%.

This mortgage does come with a £1495 application fee and the requirement to provide a 35% deposit, but it should put pressure on other lenders to lower their rates to compete.

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