07 Dec 2013
- Nearly one third (29%) of those who intend to buy in the next 12 months are first-time buyers, the highest proportion Rightmove has recorded for over three years
- Yet one in three first-time buyers (34%) say they don't understand phase two of the Help to Buy scheme, and 42% of all home-movers wrongly think it is only for first-time buyers
Signs of pent-up desire to move, waiting to be unlocked:
- More than one in five people (21%) are looking to buy as a direct result of Help to Buy phase two or are bringing forward their plans to do so - 5% say they are going to sell because of it
- If more people understood the scheme, some of the 31% who say they are 'waiting to see what happens' before they buy or sell may come to market and help balance supply and demand
- Rightmove teams up with the Money Advice Service and consumer champion Martin Lewis, offering a Q&A to help dispel Help to Buy confusion
Two months on from the introduction of the Help to Buy mortgage guarantee scheme, new research from Rightmove reveals confusion about the scheme is widespread and more needs to be done to help deliver a bottom-up recovery to a healthy housing market.
Of those first-time buyers who claim to understand phase two, nearly a quarter (23%) wrongly think it is only for new build properties, 22% don't realise it is available for homes up to the value of £600,000 and a third (34%) think it is just an extension of phase one of Help to Buy, the equity loan scheme.
Nearly one third (29%) of those who intend to buy in the next 12 months are first-time buyers, the highest proportion Rightmove has recorded for over three years and heading towards the 40% norm associated with a healthy housing market. If the scheme was better understood it could help more first-time buyers satisfy their housing needs, and the ensuing chain-building momentum could help unlock the market, enabling more potential movers to trade up or downsize.
Currently on Rightmove, the UK's largest and busiest property website, 92% of all properties for sale are within the potential £600,000 threshold of Help to Buy phase two, and 90% of new-builds. Traffic to Rightmove since the phase two announcement is up 30% compared to the same period last year.
The study among over 40,000 people reveals Help to Buy phase two has had an impact on people's decisions to move. More than one in five people (21%) are either looking to buy because of the scheme or bringing forward their plans to buy, and 5% are looking to sell. A further 31% say they are 'waiting to see what happens' before buying or selling. Communicating the full benefits of phase two could help unleash this substantial 'wait and see' proportion into action, helping to build chains from the bottom-up and helping to unlock pent up demand.
On the confusion and the need for more first-time buyers to kick-start chains from the bottom up, Miles Shipside, director and housing market analyst at Rightmove, comments:"Although it's still too early to judge the impact of the scheme, we anticipate that more first-time buyers getting onto the bottom rung of the housing ladder could have knock-on effects further up, helping more people to trade up and downsize. Many have postponed their move over the last few years as either limited equity or lack of confidence has left them unable or unwilling to. This scheme has the potential to offer hope and confidence to many of these homeowners enabling them to come to market and free up some much-needed supply.
"But there's clearly a lot more that still needs to be done to make sure the maximum number of people who could benefit directly from the scheme or its knock on effects, can do so. A significant proportion of people say they are waiting to see what happens - but if they better understood how the wider benefits of the scheme could help them trade up or downsize it might open up more supply and lead to a healthier and more sustainable housing market. The change to the Funding for Lending scheme, coupled with the tightened rules on lending as a result of the Mortgage Market review, means fears of a bubble have been quashed further. To give first-time buyers more of a chance to get on the property ladder, and help give potential movers higher up the chain the confidence to move again, the confusion needs to be addressed."
For more information people can visit the Help to Buy page of Rightmove at: http://www.rightmove.co.uk/help-to-buy.html
ASK THE EXPERT
To help people still confused about exact details of the scheme, Rightmove has asked a panel of money and property experts to explain:
Q. What is phase two of the Help to Buy scheme? (Answer from director and housing market analyst at Rightmove, Miles Shipside)
A. Phase two of the Help to Buy scheme is a government mortgage guarantee scheme. The scheme means more mortgage availability for people with as little as a 5% deposit.
Q. What is the difference between phase one and phase two of the scheme? (Answer from director and housing market analyst at Rightmove, Miles Shipside)
A. We have created this handy check list to explain the differences between the two (see attached image 1)
Q. Is it now easier for me to get a mortgage? (Answer from Martin Lewis, Moneysavingexpert.com)
A. It may enable you to get a mortgage at a cheaper rate, however it's very likely that if you only have a small deposit, there are still going to be some rather harsh credit scoring and affordability criteria. If you have a 5% deposit, a good credit score and can prove you can make repayments, what is likely to happen is you will be able to get a mortgage at a more competitive rate. However, if you could push to a 10% deposit rather than 5% you will find rates coming down significantly. If you can push to a 20% deposit, rather than 10%, then you would find rates coming down very significantly. But I do appreciate how difficult that is for many people.
Q. Is it now easier for me to buy a property? (Answer from Money Advice Service)
A. Individuals still need to prove they can afford mortgage payments and meet mortgage providers lending criteria. If these conditions can be met and you have at least a 5% deposit saved, then yes, you may find it easier to obtain a mortgage from a lender participating in the Help to Buy: mortgage guarantee.
Q. Will my mortgage payments go up after the Help to Buy Guarantee ends? (Answer from Money Advice Service)
A. No, the Help to Buy: mortgage guarantee will not impact on your future mortgage rates. If you are worried about mortgage payments going up you can ask if the lender offers fixed rates.
Q. What are the risks? (Answer from Martin Lewis, Moneysavingexpert.com)
A. You are potentially buying a property with a very small deposit, which means you have a very big proportionate loan. The biggest risk out there is that interest rates aren't just low right now - they are nearly 2% lower than the prior 200 year historic low. We are in an anomaly time and at some stage in the future, interest rates are going to bounce back. Using UK base rates as an example, they may bounce back from 0.5% up to 2%, 3% or 5%. Indeed, we may well see the return of interest rate levels we saw in the 1980s when they went to 18%. So the big risk is 'could I afford to repay the mortgage if interest rates increased'. And if the answer to that is no, then you are going to be in trouble.
Q. Will I have difficulty selling my property at a later stage if I use Help to Buy? (Answer from Money Advice Service)
A. Buying a home with a Help to Buy: mortgage guarantee will not have an impact on the saleability of the home in the future. Because with the mortgage guarantee scheme there is NO shared ownership, the resale of the property will be the same as any other standard mortgaged property.
Q. Are we creating an artificial market or a 'price bubble'? E.g. will I be in negative equity in 5 years' time if I take up the scheme? (Answer from director and housing market analyst at Rightmove, Miles Shipside)
A. The property market is exactly that - a market. Property prices can go up and down depending on a number of factors, including the balance between supply and demand. It is worth remembering that prices are lower today in some parts of the country compared to five years ago, partly influenced by the difficulty many buyers have in obtaining a mortgage. Help to Buy will increase demand for property, though crucially, it is not just for first-time buyers and so as existing home owners move they will have to sell helping to increase property supply. Help to Buy is scheduled to last for three years, the thinking being the mortgage market will be functioning better when it finishes, enabling a smooth transition.
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The data from the Rightmove Consumer Confidence survey is taken from responses completed via an online questionnaire between Monday, 14th of October and Monday, 28th of October 2013. A total of 44,077 responses were received. Data is weighted using Census data available from the Office for National Statistics to help ensure the results are representative of the UK and its regions.
The responses from the Money Advice Service are relevant for both the mortgage guarantee and the equity loan phases of Help to Buy.
Top 10 websites in UK by Page Views - Experian Hitwise, August 2013
1
Google UK
2
YouTube
3
eBay UK
4
Amazon UK
5
6
YouTube Mobile
7
Rightmove
8
BBC Homepage
9
MSN UK
10
BBC News
About Rightmove:
Rightmove.co.uk is the UK's number one property website displaying details of homes for sale or rent to the largest online audience. It has around 90% of all properties for sale and at any time displays a stock of over 1,000,000 properties to buy or rent, worth around £270 billion, and serves more than 1 billion pages a month.
Rightmove is also one of the top 10 most used websites by the UK public, currently at 7th place in August. (Experian Hitwise - ranking by UK page impressions, August 2013).
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For further information, please contact:
Amy Funston
PR Manager
T 0207 087 0605
E amy.funston@rightmove.co.uk