First-time buyers should not be put off from taking their first steps on the property ladder by a rise in interest rates, according to a London-based housebuilder.
The Bank of England today (Thursday 2nd August) announced a 0.25% increase in rates from 0.5% to 0.75%.
Although some homeowners may see a slight increase in their monthly mortgage repayments, Fairview New Homes, which builds across London and the Home Counties, insists that now is still a good time for people to get onto the housing ladder.
Jeremy Gee, Main Board Director for Fairview, said: “Much has been said about the possible impact on homeowners of the Bank of England’s announcement, but this should not distract from the fact that interest rates remain at near record low levels.
“People looking to buy their first home in the capital should not allow this modest rate rise to deter them from achieving their dream of ownership, especially when buying still makes much more financial sense than renting.
“Recent research by Santander Mortgages revealed that the average first-time buyer could save £2,268 a year once on the property ladder, a benefit which massively outweighs any slight increase in mortgage repayments.
“The availability of London Help to Buy, which enables buyers to reduce the size of the deposit and mortgage they need to purchase a home, is another advantage which buying offers over renting, and the scheme has been used by a significant number of our customers, many of whom are first-time buyers.
“Under the scheme, buyers can purchase a new home in London worth up to £600,000 with just a 5% deposit and a 55% mortgage, with the remaining 40% of the purchase price being provided by the Government as an equity loan, which is interest free for the first 5 years.
“Despite this modest rise, interest rates are still very low by historic levels and there are plenty of good mortgage deals on the market for first-time buyers to choose from.
“And with the Bank of England indicating that any future rate rises will be gradual and limited, conditions for homebuyers look set to remain favourable for some time to come.”