First time buyers take advantage of plummeting interest rates in July

Over July the number of UK first time home buyers increased by 45% due to a dramatic fall in the average mortgage rates making it a more affordable prospect for many homeowners to get into the housing market. There were 26,100 new first time home buyer sales during the month of July which was a bit over 8,000 more than July of 2012. It was also the highest number of first time buyers during any month since November of 2007.

According to LSL Property Services which ran the survey, this is a strong indication that the first time home buying market is starting to improve as mortgages become much more affordable to attain. Since July of 2012 the average mortgage rate has fallen a full 1% down to 3.99%. Every month for the past 12 months rates have steadily continued to fall helped by the Funding for Lending credit that banks have received from the Government.

First time home buyers are appreciating and noticing the change in rates as the proportion of income that mortgage repayments make up have fallen down from about 22% to just 20%. According to the same report from LSL Property Services, the average deposit is about 80% of annual income which is a 5% increase since last year and is one reason why first time home buyer lending has been stalled.

Also increasing average purchase price of homes for first time buyers increasing by about .3% in the last month and about 6% higher than the overall pricing in the last six months. Despite these changes, the average LTV for first time home buyers stayed roughly about the same. Director of LSL Property Services, David Newnes, stated that compared to last year many first time home buyers will find that mortgages are much more affordable opening up the market to them.