London (Parliament Politics Magazine) – Nearly half of house hunters in London at the start of this year were first-time buyers as cheaper mortgage deals delayed the exodus from the capital, figures from a leading estate agent display.
Why Are More First-Time Buyers Choosing to Stay in London Despite Rising Prices?
First-time buyers formed 48% of purchasers in the city between January and June, according to an analysis by Hamptons of data from Countrywide estate agents. This was the most elevated since at least 2010 when its records started, and up from 41% in 2023 and 28% a decade ago, the analysts stated.
What Impact Are Falling Mortgage Rates Having on the Spending Power of London’s First-Time Buyers?
Hamptons stated the impact of lower mortgage rates on the spending power of buyers had been “significant”, with the moderate first-time purchaser in London expending £443,550, which was £39,360 more than last year. Aneisha Beveridge, the director of research at Hamptons, said:
‘“Falling mortgage rates are starting to turn the tide on the rising number of first-time buyers leaving London. Lower mortgage payments have pulled the cost of buying back below renting, bringing relief to those looking for their first home in the capital. First-time buyers with deeper pockets are looking again at London, choosing Clapham over Crawley and Wembley over Wycombe.”
Countrywide possesses brands including John D Wood & Co, which runs at the prime end of the market, and mainstream names such as Bairstow Eves. Its figures do not include info from rivals such as Foxtons and Savills. Mortgage rates were declining in the early months of this year, as anticipations of an interest rate cut grew. Last week, there was a flurry of cuts by some of the biggest banks and building societies, and brokers said they expected more to come.
Could Declining Mortgage Rates Signal a Shift in London’s Housing Market Trends?
Nicholas Mendes from the mortgage broker John Charcol stated that while the best deals had been on mortgages for those with a deposit of at least 40%, there were now cuts in rates for those borrowing up to 75% of a property’s worth. “Mortgage rates are expected to persist falling in the coming months, despite the anticipated rise in inflation. Markets are pricing in further declines in the Bank Rate, and lenders have room to keep falling rates. We could potentially see a five-year fixed rate of around 3.5% by the end of the year,” he stated. For a higher loan to values, rate reductions may happen more gradually, but we might see rates between 4.2% and 4.5% by year-end.”
First-time consumers only pay stamp duty on properties commanding more than £425,000 thanks to temporary relief for England and Northern Ireland presented two years ago by the then chancellor, Kwasi Kwarteng. The Conservatives had promised to make the threshold permanent if they succeeded in the election, but Labour has previously stated it would allow it to revert to a £300,000 limit for first-time buyers from 31 March 2025.