Today, independent mortgage broker, Private Finance has said that renewed competition, rising house prices and increased regulation will mean that first time buyers will now be in need of much more support in gaining access to finance under the new Conservative Government.

Whilst the broker has recognised and supported the role of Government schemes such as Help to Buy and the newly proposed Starter Home Scheme for first time homeowners, it has said that these initiatives are still only suited to some smaller areas of the market and should in no way be regarded as a ‘panacea’.
Private Finance has also warned that rising house prices under the new Government may leave many first time buyers struggling to meet affordability criteria without expert guidance.

However, whilst it recognises that first time buyers will need extra support at this time, the broker has said that the likelihood of a surge in the number of first time homeowners in the next twelve months is ‘entirely possible’, provided they seek professional advice and are able to fully explore the opportunities available.

Simon Checkley, Managing Director of Private Finance says:

‘Both sellers and buyers have been sitting on their hands waiting for the Election to pass. Each group will now almost certainly spring into action which will mean more supply. Lending and transactions were subdued in the first quarter of this year; meaning pent up demand is likely to ignite a flurry of activity which is great news for the market as a whole.’

Checkley continued:

‘Increased supply and the likely prospect of higher wages under the new Government mean that the first time buyers of today might start to enjoy improve buying conditions. Furthermore, supply is likely to be improved by the predicted improvements to planning legislation under the new Conservative leadership which will also support new development and housing, as well as the introduction of possible tax incentives to support building programmes. These buyers are also now operating in a low interest rate environment, which gives them a further advantage in today’s market.’

Checkley added:

‘However, we have to caveat this by saying that affordability is still a very major issue that is likely to be exacerbated for first time buyers by the current predicted rise in house prices. First time buyer affordability as a multiple of earnings is still on a par with previous maximums and lender criteria is now much more stringent. For this reason, many buyers could find themselves struggling to gain access to finance from their traditional high street bank or building society. To fully understand what is achievable as part of a longer term home ownership strategy; taking into account, amongst other things: the likely direction of interest rates, wage growth, borrowing capacity, ultimate capital repayment, these buyers would be well advised to seek expert guidance from an independent broker who can not only take care of the increased administrative burden introduced by MMR, but will also provide access to a variety of products from across the whole of the mortgage market.’

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