Posted: 05 Dec 2017
#First Time Buyer
How will the recent increase effect Shared Ownership?
Earlier this month, The Bank of England’s Monetary Policy Committee chose to raise the national interest rate from 0.25% to 0.5%, the first increase in the lending rate since July 2007.
The aim of the rate rise was to reduce inflation, which has increased as a result of the higher cost of imported goods following the de-valuation of the pound after the EU referendum in June last year.
Many in the property industry believe that the small rate rise will have a minor impact on the property market. For instance, those with fixed rate mortgages will not be impacted until their loan is up for renewal. However, those with a standard variable rate will inevitably see their monthly costs rise, but only by a nominal amount.
How will the interest rate rise impact first time buyers?
For first time buyers, the rise in the interest rate means that those wanting to get on the property ladder will have to pay more to do so.
However, in reality borrowing is still cheap enough to make buying a first home achievable. Research from the Yorkshire Building Society found that only 8% of potential first time buyers would change their mind about buying a new home if the interest rate increased.
The bigger issue for first time buyers is the size of deposit required to purchase a home. Indeed, 44% of first time buyers stated that the size of deposit would prevent them from buying a property, while 33% are worried about being able to afford local property prices.
How can Shared Ownership help?
Shared Ownership allows first time buyers to purchase a share of a home with only a limited deposit. This is because a deposit and mortgage is only required for the purchased share, not the entire property.
Furthermore, Shared Ownership home owners are able to live in the property as though they own it outright. The scheme also allows buyers to increase the share they own at a time convenient for them.
Are you looking for a stylish and modern home?
Southern Home Ownership is dedicated to providing stylish, high quality and contemporary new homes for sale on a Shared Ownership basis.
If you're a first-time buyer and interested in owning a Shared Ownership property in London and the South East then click on this link to take a look at our latest developments.