According to many reports now is actually one of the best times to purchase a home in the UK – though only if you can afford to made a sizable enough deposit to successfully lock in a decent fixed mortgage for your home. The reason for this is that many experts feel that the continued low mortgage rates that have helped drive the strong housing market in the past few years coupled with the continued strong growth of housing supply may be near a tipping point in terms of shifting lending institutions away from a strong buyer-friendly scenario.

One of the leading factors of making now a strong time to buy than in the past when the real estate market first released many of its incentives to stimulate growth is that only in the past few days has the cost of a regular monthly mortgage payment actually been reduced below that of renting. In fact for first-time buyers in particular this is a great sign as the continued stamp duty holiday for first-time purchases means highly favourable conditions that allow for a strong buy now rather than in the future where these benefits may be changed.

Nevertheless the current time being seen as the best time to buy is highly dependent upon whether or not individuals can make a high enough down-payment in order to get the best interest rates possible on loans. A deposit of 25% and a total loan-to-value ratio of 75% will, for instance, yield significantly better interest rates than even a deposit of 10% and especially a low deposit of 5%. This equates to a total savings of hundreds of Pounds each month in mortgage payments or thousands over years of repayment. Unfortunately for most given the high cost of houses throughout the country making a sizable contribution at this time is difficult at best and may not be possible without help from friends or family – something that is a going concern with many economists given the need for extended debt for many pensioners looking to support their children’s purchases through re-mortgages.

According to a recent survey some 33% of people who are now renting properties believe that they will never be able to afford to buy their own homes. The research goes on to indicate that of the renters that are upbeat enough to feel that they will one day own their own place, some 65% are of the belief that they will not be in a position to buy for the first time in the next five years.

The survey also indicates that 77% of respondents anticipate that property prices will fall by at least 5% during the course of the next year, and 31% believe that house prices will drop by over 10% during this time.  Also, although 89% of those sharing flats currently indicated that they are doing so only due to the fact that they are unable to purchase their own homes, 52% of all renters stated that they would be content to rent for the rest of their lives if there were no pressure to purchase. The results show that those not sharing accommodation living alone or with a partner are more content with their lot than those sharing accommodation.

According to many reports the majority of young people today are becoming more and more comfortable with renting long-term, keeping watchful eyes on the market for a positive change that would allow them to become more able to secure a purchase in the near future. With the changing market and current instabilities, however, this is being seen as very much a long-term goal that, should the trend continue, may even result in long-term leases rather than purchases from many people that are unable to enter into the market for any number of reasons – even with lasting incentives for first-time buyers.

With most lending institutions requiring buyers to have significant deposits on hand in order to secure the best mortgage rates on their loans (or to even be approved for a loan in the first place) many prospective home owners have turned to an old yet familiar source of funds: the venerable Bank of Mom and Dad.

As most mortgage companies can tell you the actual number of mortgages being approved on the market today have first-time buyers as a significant minority. In fact, of all the mortgage offers made available on the market in March, only 7% of the total out there were granted to first-time buyers seeking out homes. This means that re-mortgages and other mortgage types have taken up a considerable portion of the market share in order to provide funding for a home purchase that would otherwise be impossible.

The largest reason for most first-time buyers being able to afford a home purchase today lies in the fact that most individuals simply have not developed enough savings to afford the necessary down payment in order to become eligible for the best rates possible. This means that for a home values at roughly ?300,000 a 20% deposit, or roughly ?60,000, would be needed to ensure that a prospective home owners would be able to get the best rates possible to them. Given most young workers’ salaries, however, this sort of available equity being on hand to give to a lending institution is generally considered unfeasable and unrealistic at best.

Until the country’s economy turns around enough to make a reasonable comeback most families are simply considering sticking to the "group support" option to provide their children with the necessary funding – otherwise many prospective buyers simply will not be able to make purchases. As it stands right now the current status and regulations have effective removed an entire generation of buyers from the market. something that is far more likely to hurt rather than help the overall economic recovery in the long-run.

The chairman of a UK debt charity spoke out recently, claiming that mortgages to first-time buyers should only be agreed once they have had some training and passed a subsequent exam. Malcolm Hurlston from the CCCS has put forward the suggestion that mortgages should come with a buyer beware warning (caveat emptor), instead of the current tax break granted by the Stamp Duty Concession.

When addressing members of the housing credit industry last week Mr. Hurlston insisted that those least well off as well as those purchasing homes before they were ready to remained highly in danger of falling into a trap of “unmanageable debt,” in particular lower income families that already have difficulties with debt in most cases that then take on home ownership either too early or though ways that are "less than ideal". He referenced the Northern Rock situation as well, describing the situation in that particular debacle where a large number of 110~120% loan-to-value loans were in play as pure madness, going on to say that some sort of tuition should be looked into for people on low incomes considering a first-time mortgage.

Of particular interest was a reference he made to recent “pre-buying” federal education programs in the US. He insisted that first time mortgages would be better to not come with tax breaks “but with health warnings.” He compared them to driving licenses, stating that they should be packaged in much the same way when a person gets one after a period of study followed by an exam. He called on Financial Services Authority members to oversee all first-time mortgage buyers, with homeownership certificates to be introduced for those purchasing their first homes – and some feeling as well that it would be good even for home owners looking to get a re-mortgage should they have had problems in the past.

Sue Anderson from the Council of Mortgage Lenders agreed that, although there existed a coherent argument for arranging for much better education and guidance with regards to credit-related issues, the majority of people that encountered problems with mortgage repayments were generally affected by changes in their professional and personal circumstances such as sudden unemployment, which could not be mitigated by such training.

According to the most up-to-date research, the number of first-time home buyers in the UK has stayed at an almost twenty-year trough during the past year, and analysts suggest that the latest boost regarding stamp duty will be unlikely to help first-timers get their feet on the property ladder. The survey, conducted by Gfk’s Financial Research survey, indicated that 347,000 home-buyers took our mortgages for the first time for the annual period up to February, 2010. This figure is a slight increase on the figure of 331,374 recorded the previous year which was actually the first time that the figure had dipped below the 350,000 mark since the survey’s inception in 1993.

It is clear also that the number of first-time buyers has not raised significantly even in the wake of the stamp duty holiday incorporated over the course of last year on houses coting up to £175,000. The latest figures compares with a high point of over 700,000 in the yea 2004/05 and the yearly average figure of 561,000. It is also down 100,000 on the trough experienced during the period of the last recession back in the early 1990s, according to the research by Gfk.

They also added that the huge strain put on first-time buyers as a result of current deposit requirements would in al likelihood mean that recent measures taken by the government to offer stamp duty relief to all first-time buyers purchasing houses worth up to the value of £250,000 wouldn’t provide sufficient support despite the fact that mortgage rates are even hitting record lows in some cases.

As far as deposits are concerned, banks are currently insisting upon much higher deposits that in pre-credit crunch times, which has resulted in first-time buyers needing to amass savings of tens of thousands of pounds before they can even begin to think about buying a property.

When linked together with ever-rising house prices, the statistics from Gfk show that the average age of first-time buyers has risen from 31 in 1991 to 32 now. Gfk concluded that the lack of ability to raise a deposit was at the very root of the problem and was ‘locking younger people out’ of the housing market. The figures also showed that more and more over-50s were being granted first-time mortgages, and has lead to an increasing number of the baby-boomer generation buying up homes for their struggling children. Many are also buying for themselves as investments, helping to provide domestic competition in addition to a number of overseas investors also looking at the UK market. Gfk’s director, Ben Steer commented that “The current challenge for lenders is to create products that will assist young people without creating the kind of conditions that sparked the crisis in the first place.”

According to a survey recently commission by the National Housing Foundation nearly 22 percent of young individuals considering marriage in London are considering putting off marriage due to the current rise in house prices and their inability to afford homes. In fact, of all Londoners ages 18 to 30 roughly 6% feel that they will wait up to 20 years before being able to afford a home purchase and subsequently start a family.

Although the amount of good mortgage offerings has increased significantly in recent months due to various lender and government incentives to hopefully stimulate some additional market interest unfortunately this has not been enough to help secure new home owners a place to call their own. Even the new stamp duty break for first-time buyers purchasing new homes valued up to £250,000 is seen as a huge advantage for prospective purchasers throughout the country the average home price in London nears this for low-end properties far from downtown and in nearly all cases the purchase of a reasonable home would value much over this reasonable level.

Yet one more major concern for many purchasers is simply the cost associated with an initial down payment on the home. A standard 20% down payment on a home valued up to £300,000 could end up costing £60,000 and more if buyers wish to lock-in the best fixed rate mortgage possible. With an average annual pay in the city of £82,000 a year as of 2009 and various taxes and costs draining that substantially the amount of flexible remaining liquid funds is limited at best, and with investors looking to muscle-in on much of the market many prospective home owners may not find a window to make a reasonable down payment even for quite some time.

With the cost of house prices fluctuating rapidly in many areas and offering unpredictable results from an investment standpoint as well as the mortgage market changing with the economy and making the best mortgage rates unavailable to all buyers many people are beginning to try and push more towards renting a home rather than doing an outright purchase, especially for first-time buyers who are yet to commit to a home. Whilst this may be contradictory to what the government is currently trying to achieve by expanding the Stamp Duty since the holiday ended at the beginning of the year there are still many pros and cons to the argument.

Primarily one of the biggest concerns as well as supports of lending over buying is the issue of cost, wherein renting a home over a 25-year period rather than dealing with the mortgage sector may actually save potential home owners substantial sums of money. At the same time, however, the fact that individuals living in a home they do not own will not be able to benefit from any property appreciation on the location. Given that many homes tend to fall into disrepair over time without costly maintenance, however, this is an arguable support of purchasing in today’s market.

The issue has become particularly poignant in many commercial sectors, where favourable commercial mortgages are being offered to try and persuade buyers to help develop that sector that is currently facing some residual troubles from the economic recession. As many times a less-than-spectacular economic turn can lead to quick property losses on these types of properties potential buyers are turning more towards leasing rather than outright purchases, particularly in larger cities such as London where property prices are particularly high.

In any case the issue of whether or not to purchase or rent a home is something that must be decided upon before hitting the property markets as the benefits as well as drawbacks of each need to be considered before committing to an agreement that could potentially change your life in both the near and far future.

New plans detailed in the Chancellors’ recent budget to provide assistance for first-time buyers have been met with what has been described as a ‘cautious welcome’. The stamp duty on transactions of up to £250,000 is set to be suspended for people purchasing their first property for 2010 and 2011 in proposals announced by Alistair Darling. The proposals have attracted certain criticism from some industry bodies who argue that the plans should apply to all home-buyers as it might be somewhat hard to police.  The proposal will be funded by the planned raising of stamp duty to 5% on properties costing in excess of £1 million. Stamp duty levels currently stand at 4% of the total purchase price for houses costing in excess of £500,0000, and at 1% for properties costing between £125,000and £250,000. Properties that stand between these two brackets are charged at a stamp duty of 3%.

The CML have postulated that, rather than simply restrict the measure to only first-time buyers, it would have been far simpler to simply exempt all properties with a total value of less than £250,000. Along with the Council for Mortgage Lenders the CIT warned that the definition and subsequent proving of just who exactly is a valid first-time buyer potentially could well be very difficult, as there may well be complex cases that cause difficulties in practise and prevent otherwise valid purchases or even good mortgage offerings.

The Council for Mortgage Lenders went on to warn that it may be very difficult to verify just who is a genuine first-time buyer as compared to those who have previously owned property however no longer do so. In order to successfully qualify under the new measures buyers will need to be buying their first home where they are buying individually or jointly. If a couple are buying a home and one has previously owned a property the couple will not be adjudged as first-time buyers. They must not have previously owned property anywhere else in the world as well, having no overseas mortgages or outright purchases on record. Buyers must also be purchasing a location that will serve as their main or only home, and the completion date for the sale must be on or after 25th March, 2010 up to March 25th, 2012.

According to the latest research conducted by the Building Societies Association, confidence in the UK property market remains brittle as the country enters the final periods before the General Election, and buyers remain largely uncertain as to whether or not now is the best time to buy.

In general, it appears that people largely expect property prices will rise during the next year, although the current political uncertainties are giving rise to concerns that their buying power may be adversely affected. 

Some of the latest property surveys carried out by the BSA revealed that people are expecting property prices to increase by 2.2% during the coming year, although only 49% of those questioned believed that now is one of the best times to purchase a home. This figure is some way down on the 58% that responded positively as of December 2009 and it is the first occasion as well that the percentage of those questioned believing that now was a good time to buy has fallen below the 50% mark.

According to Paul Broadhead, Head of Mortgage Policy at the BSA, the figures are largely unsurprising. He believes that potential buyers will hold off in order to ascertain the effects of the ending of the stamp duty period on the property market. He also agreed that the upcoming budget as well as General Election give possible home-buyers “further levels of uncertainty.”

Mr Broadhead added, however, that people still appear to regard property as a decent investment, as they still expect property values should rise over the coming twelve months – particularly good for those seeking to get the best mortgage value possible. He hopes that buyers will return to the market following the election and confidence return with regards to the economic outlook.

Current research seems to suggest that 2010 could potentially be an strong year for many first-time buyers, with roughly 42% of all enquiries to registered mortgage advisers being from people looking to purchase their first property according to the latest reports from many property analyst groups. They believe that, all things considered, 2010 may easily turn out to be considered by many to be the "year of the first-time buyer" with even commercial mortgages getting a boost from the recovering economy, though naturally it is still too early in the year to determine whether or not this case will turn out to be true or not.

In  mortgage news, the Bank of England released its survey of the 3rd quarter credit conditions in the UK.

According to this report, the high street banks reduced the supply of mortgages and other credit to households during the third quarter, in contrast to the previous quarter which had seen more mortgage availability.

This shrinkage occurred despite te fact that  banks had promised to increase their lending. Bank representatives said they were unable to do this because of the deterioration in the cost and availability of funds.

Paul Samter, economist for the Council of Mortgage Lenders, was quoted in the report: “Lenders reported a welcome reduction in default rates on mortgages in the third quarter – the first in two years. Following our own figures showing a decline in mortgage possessions in the previous three months, there are encouraging signs that households are coping better than expected with difficult conditions. Despite this, however, we still expect payment problems to increase in the coming months, given the weak economy and jobs market.

“The survey also reported a small reduction in mortgage availability in the second quarter, mainly due to an unexpected deterioration in the cost and availability of funds for lenders themselves. More encouragingly, however, the survey found that lenders expect mortgage availability to improve modestly in the next three months.

“There have been recent signs of an improvement in wholesale funding market conditions, and the survey records a notable pick-up in lenders’ expectations that this will continue in the next three months.”