The Homebuyer Roundup #1

The Homebuyer Roundup #1

Get the adviser view on the week’s homebuying headlines.

This week in homebuying

We’re close to the end of the stamp duty holiday, with less than 2 weeks to go before the threshold for paying the tax drops from £500,000 to £250,000. That means many buyers are rushing to complete before the 30th June deadline, and some are even skipping essential steps like getting a survey done.

The economic impacts of the pandemic are still hitting aspiring homeowners from all sides. With the over-50s facing higher redundancy rates than any other age group, many can no longer rely on a leg up from the Bank of Mum and Dad.

Plus, higher mortgage rates could be on the horizon if another Bank, the Bank of England, decides to respond to rising inflation by putting up the base rate.

The good news? Renting’s cheaper than buying (for now). Average rent payments are lower than mortgage payments for the first time since 2014, which could give savers the chance to stash a bit extra each month.

We had a little look at the targets people set in our app. Here's what we found:

  • First-time buyers aim to save their deposit in just under 3 years on average. In London it's 5 years, and in Edinburgh and Brighton people save for 4.
  • The average age to start planning to buy a home is 25, and at this stage it's typical to have around £5,000 saved up so far.
  • Many buyers are looking to leave London in search of more space. But where are they going? Our data shows that the top 10 towns Londoners want to move to are:
  1. Romford
  2. Maidstone
  3. Slough
  4. Basildon
  5. Edinburgh
  6. Saint Albans
  7. Milton Keynes
  8. Brighton
  9. Manchester
  10. Bristol

The homebuying headlines

Here's what happened this week, and what we made of it.

Renting's cheaper than buying

It’s cheaper to rent than to buy a home for the first time in 6 years, according to Hamptons. The estate agent reckons that in March 2020, buyers with a 10% deposit would end up £102 a month better off on average by buying a home. But falling rents mean it’s now cheaper to rent a home in most of the UK.

BOMAD dries up

Thousands of first-time buyers are putting their plans on hold* as the “Bank of Mum and Dad” (BOMAD) tightens its belt. Half of first-time buyers fear that cash gifts from family will be hard to come by after the pandemic. Why? Parents are under financial pressure now too, with over-50s the most likely to have lost jobs in recent months.

Inflation jumps

The inflation rate rose to 2.1% in May, fuelled by rising clothing and petrol prices. It’s now above the Bank of England’s 2% target for the first time since summer 2019. Inflation was expected to go up as the economy reopens and people start to spend more - but not by this much.

Moving companies overwhelmed

Removal firms are entering their busiest weeks ever, as homebuyers race to complete before the stamp duty holiday ends. Many say they’re overwhelmed and turning people away. Rightmove reckons 700,000 home sales are nearing completion in the UK - if they can complete before 30th June, they stand to save up to £15,000 but Zoopla estimates 50,000 won’t make it.

Stamp duty deadline approaches

Frazzled home buyers are cutting corners* to try and complete before the deadline. Conveyances say some are skipping essential surveys that check for flood risks and Japanese knotweed - problems that could cost thousands down the line.

Spike in offset mortgages

More borrowers are using their lockdown savings to reduce the interest they pay on their mortgage. Brokers are reporting a spike in applications* for offset mortgages, which save you interest in the same way as making overpayments does without tying up cash savings.