New research by estate and lettings agents, Barrows and Forrester, indicates a significant decline of over 25% in the number of available mortgage products for first-time buyers since Q1 2023.
Barrows and Forrester conducted an analysis of mortgage interest rates and product availability across various industry sources to assess the impact of the ongoing mortgage crisis on prospective homebuyers.
As mortgage costs continue to escalate, the Bank of England’s recent forecast suggests that current homeowners could experience an increase of up to £500 in their monthly repayments. However, the focus now shifts to understanding how this crisis, driven by rising interest rates, is affecting individuals seeking mortgages, particularly those embarking on their first home purchase.
Newly released research delves into four mortgage categories, encompassing buy-to-let, remortgage, first-time buyer, and moving home. The findings expose the most substantial interest rate hike in the buy-to-let sector, rising by 0.81% to reach 4.5%. Notably, this currently stands as the highest interest rate across all four categories.
Remortgage products have experienced a 0.24% increase, now resting at 4.03%, while first-time buyer and moving home rates have seen respective increases of 0.23% and 0.03%.
Although first-time buyers may find some solace in receiving the second-lowest rate increase, they still face potential challenges. This stems from the significant reduction in the availability of mortgage products specifically designed for first-time buyers, which surpasses any other category.
The number of first-time buyer mortgage products has drastically reduced by 25.6% since the end of Q1, leaving only an estimated 412 options currently available. This figure represents the lowest offering among all four mortgage categories.
Moving home mortgages currently have the highest availability with 2,270 products, despite experiencing a decline of 15.9% since the end of Q1. Remortgage products, on the other hand, remain relatively healthy at 2,207 despite experiencing the largest drop of 16.2%.
James Forrester, the Managing Director of Barrows and Forrester, highlighted the challenges faced by buyers in today’s market. He noted that first-time buyers, in particular, will encounter significant limitations due to the scarcity of available mortgage products, which will impede their ability to secure financing.Lenders show a stronger preference for offering a range of mortgage options to existing homeowners, although they also face challenges such as cost increases and a notable decrease in product availability.
While the mortgage crisis could potentially worsen in the upcoming months, the current situation, although tough, is not as severe as the market turmoil witnessed in the 90s and more recently in 2007.
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