First-Time Buyers Opting For Longer Fixed Terms
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First-Time Buyers Opting For Longer Fixed Terms
Recent research from mortgage broker Accord has analysed the purchasing habits of both current homeowners and first-time buyers over the year up to January 2018.
Looking at the applications the lender received for five-year fixed rates over the 12 months, it appears that first-time buyers are increasingly looking to tie down a deal for the longest term possible.
According to their latest report, Accord found that the number of first-time buyers choosing a five-year fixed deal has doubled from January 2017 to January 2018, suggesting that newcomers to the market are becoming savvier on the best options for them and taking advantage of the record low-interest rates.
When compared to current homeowners, those looking to move home or remortgage are less interested in 2 year fixed deals, with the number of applications for this type of deal falling from 63% to 48% across the 12 months to January 2017.
While affordability may be the biggest hurdle for many first time buyers, the report from Accord actually showed an increase in the number new buyers with a 15% deposit, with a rise of 7%.
It was also found that 90% LTV mortgages were still accounting for the majority of first-time buyer applications and increasing by 4% over the course of the year.
Mortgage Manager at Accord, Ben Merrit spoke on the results of the research, he said; “Recent figures from UK Finance showed the highest number of first-time buyers in the housing market in a decade in 2017, so this market is currently in a really strong position.
"It’s pleasing to see more first-time buyers getting their foot on the property ladder and is perhaps unsurprising that the numbers continue to rise given the recent changes to stamp duty and November’s Bank Rate rise.
"Our data shows that first-time homeowners are making canny decisions about the type of home loan they choose, such as opting for longer terms, which reflects the sound advice brokers are likely giving to their clients.
More and more first-time buyers are turning to a broker, perhaps because choosing a mortgage is one of the biggest challenges they will face in their adult lives. The growth in intermediary share of lending over the past five years, rising from 53% in 2012 to 77% in 2017, clearly demonstrates the value borrowers place on the role of a broker.”
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