Due to the recent events in the housing market, coupled with the difficulties faced by banks and building societies in their ability to offer new loans and mortgages on property purchase, potential first time buyers who may be looking to get their foot on the first rung of the property ladder have been advised to wait until things settle down before they commit themselves to purchasing.
The advice comes from the advisory service Firstrung. The recommendation provided by their operations director, Paul Holmes, is for first time buyers to sit it out until house prices have fallen further and they will be able to purchase more for their money.
At the moment property prices are still particularly high and many potential first time buyers are in the position of not being able to obtain a loan or mortgage for the required amount, due to not having sufficient income to justify the affordability of the loan. To make this situation worse, many banks and building societies are restricting their lending criteria when it comes to the income multiples they are prepared to offer on a home loan and also require a larger deposit to be paid by the borrower.
House prices have dropped consistently for the past eight months and most experts predict that they will continue to do so for several months to come. By waiting for further price reductions, someone buying for the first time is likely to be able to get their first home cheaper and in the meantime they have the opportunity to save up and put down a larger deposit, thereby giving themselves a better chance of being accepted for a loan or mortgage.
Of course, this is a double edged sword, first time buyers need property prices to fall in order to be able to become established on the property ladder, but at the same time however, the housing market needs first time buyers to be entering the market, due to the fact that without them, nobody else is able to move house and the property market will stagnate, causing prices to drop further still.
