Nearly four in 10 (39%) prospective homebuyers said heightened house prices were a key factor impacting their property purchase, according to research from the Mortgage Advice Bureau (MAB).
This was followed by 29% mentioning high interest rates increasing monthly mortgage payments and 28% pointing to the cost-of-living crisis.
Of the 1,003 polled, a quarter of prospective buyers and first-time buyers said that high interest rates had made it more challenging to get approved for a mortgage due to increased costs.
MAB found that a fifth of prospective buyers had taken on more than one job to cope with financial pressure, rising to 22% of first-time buyers.
For 17% of first-time buyers, they’ve selected a longer mortgage term, while a similar number said it was necessary to borrow more to back their property purchase.
Wellness and wellbeing holidays: Travel insurance is essential for your peace of mind
Out of the pandemic lockdowns, there’s a greater emphasis on wellbeing and wellness, with
Sponsored by Post Office
One in five prospective buyers and 25% of first-time buyers said the cost-of-living crisis’ impact on their credit scores was delaying their property purchase plans, and concerns over job security or potential redundancies were cited by 12% of prospective buyers and 13% of first-time buyers.
Rent increases were another factor in delayed property purchase plans, with 23% of prospective buyers saying rent rises were making it more difficult to proceed with their home buying plans, followed by 36% of first-time buyers.
Only 9% of prospective buyers and 5% of first-time buyers said that nothing was impacting their property purchase plans.
Buyers shouldn’t try to ‘time the market’ for property purchase
Ben Thompson, deputy CEO at MAB, said that the “impact of higher interest rates cannot be overstated”.
He added: “However, with innovations in the market and light starting to appear on the horizon, there is still a possibility that 2024 can be the year to get on the property ladder.
“Though it isn’t suitable for all applicants, mortgage products that take rent into account can be very helpful for buyers struggling with the cost-of-living and the ability to save for a deposit. Likewise, extending a mortgage term to lower your repayments doesn’t need to stay that way. In a few years’ time, you can always remortgage, and shorten your mortgage term.”
Thompson said that it was important that buyers “don’t try [to] time the market, as it’s nearly impossible to time the property market at the perfect sweet spot”.
“If you’re able to buy a property you like, go for it. For those not yet at the stage to sign on the dotted line or just starting out on the journey to homeownership, using a mortgage calculator can help you estimate how much you can comfortably borrow upfront, giving you a head start in your property search.
“It takes a lot of time to get all your ducks in a row, so starting now and getting advice to become mortgage ready is key,” he said.
Meanwhile, Danny Belton, head of lending at MAB, said with the deposit the hardest thing to save for, if you can try to save a few thousand more, it could push you into a lower loan-to-value (LTV) band and therefore secure you a cheaper deal.
“Making use of the free £1,000 per year of the Lifetime ISA could be crucial, and remember if there are two of you buying, you can both get £1,000 a year for free,” he said.
For those already on the property ladder, Belton said it’s vital not to sit on the standard variable rate (SVR).
“In most cases, this will be much more expensive than a new fixed mortgage or other alternative. In some instances, it could cost you £24,000 more over the same amount of time as a fix,” he added.
This article is based on one that was first published on YourMoney.com‘s sister site, Mortgage Solutions. Read: Almost a third of buyers delay property purchase due to high costs and interest rates
