The recent Budget announcement holds critical implications for first-time homebuyers.
- Stamp duty thresholds for first-time buyers are set to revert in April, urging timely action.
- Reduced supply in the private rental sector could increase rents, burdening potential buyers.
- New home building commitments are ambitious but uncertain in execution.
- Stable high LTV product availability offers some relief amidst fluctuating house prices.
The latest Budget has prompted significant reactions from first-time buyers, particularly due to the impending change in stamp duty thresholds. From April, the current reliefs for purchasing homes up to £425,000, or £625,000 in certain cases, will no longer be available. This presents a pressing timeline, as the average property transaction can take five to six months, thereby necessitating immediate action to meet the deadline before April.
While an increase in stamp duty for buy-to-let landlords might seem beneficial for first-time buyers, the reality is less straightforward. A decrease in the private rental sector’s supply usually leads to higher rents. This scenario, driven by sustained demand, may extend the timeframe for saving the required deposits, complicating the entry into the housing market for new buyers.
Commitments to build over 1.5 million new homes during this parliament offer a beacon of hope, albeit a cautious one. Past promises have often fallen short, leaving buyers sceptical about whether these initiatives will be realised in the projected volumes. It’s imperative that these developments proceed as planned to stabilise house prices effectively, aligning supply with the ongoing demand.
Despite some uncertainties, first-time buyers currently enjoy a relatively stable selection of high loan-to-value (LTV) mortgage products. The availability of 95% LTV options remains consistent, albeit with slight pricing variations. The recent Budget has led to an uptick in rates, but favourable products from major lenders, including Clydesdale, Halifax, and Lloyds, continue to offer competitive deals for both two-year and five-year fixed rates.
Given these circumstances, there might be a growing interest in variable rate mortgages, especially if projections suggest a decline in rates over the next year. Advisers could find this a crucial period to guide first-time buyers towards the best options, ensuring they benefit from existing stamp duty concessions while navigating the fluctuating mortgage landscape.
The Budget underscores the necessity for strategic planning by first-time buyers to leverage current opportunities amidst legislative and market shifts.
