The average price to buy a house in the UK has been rising considerably each year, with 2021 having the fastest growth rate in 15 years as per The Guardian. However, in January 2022 the rise in house prices slowed to 0.3%, with it likely that house price growth will continue to fall over the coming year. Even with the house price rates decreasing, affordability is still low, due to a lack of growth in earnings. When you account for interest rates, inflation, and a higher cost of living, how realistic is it when it comes to owning your own home, especially for first-time buyers?
Interest rates and inflation
Lower interest rates typically mean more affordable mortgages, but February 2022 saw the second rise in interest rates since December 2021, with the Bank of England putting them up to 0.5%. When you consider that inflation is expected to rise to over 5% in the coming months, properties are gradually becoming more and more expensive to buy and maintain.
With homeowners also facing a dramatic increase in their living costs, from higher gas and electricity bills to a rise in national insurance payments, getting on the housing ladder is becoming more unrealistic. Although deposits will remain important when it comes to house price inflation, those people who have a smaller deposit will find it more difficult to get on the housing ladder, compared to those with a bigger deposit, due to the supply and demand of properties around the country.
Help to Buy scheme
According to a report by homebuilding.co.uk, those wanting to buy their first home with the Help to Buy scheme will need to be quick, or they could miss out on their forever home. The government will be abolishing this scheme in March 2023 and, considering the fact that houses can take months to finalise, you’ll need to have completed the sale by the 31st of March 2023. This means that younger generations, and even older people, will find it more difficult to become homeowners.
What does this mean for first-time buyers?
Becoming a homeowner in 2022 can be a daunting experience, especially if you’re a first-time buyer looking to find the best deal for your mortgage. Speaking to a professional can be beneficial in these circumstances, as they can offer free advice and help you get to where you need to be. For example, Trussle is a free mortgage adviser offering expert guidance to help first-time buyers get their first mortgage. They’ll liaise with lenders to ensure you get the best deal available, giving you an answer on your mortgage within five days as part of their Speed Promise. This means you’ll know within a week whether you’ve got a mortgage, with expert advisers available via a live chat should you need to speak to someone.
While getting on the housing ladder can appear unrealistic, there are paths that you can go down to become a homeowner. With mortgage advisers on hand to help you to get the best mortgage deal for you, it can be a more achievable dream than you first thought.