The Margate Housing Market and First-Time Buyers
The Margate housing market is relatively buoyant, thanks to an unexpected group of people – Margate first-time buyers. Many Margate tenants are annoyed with competing for Margate rental properties at high rents. Therefore, over the last 12 months, many renters have been stretching their finances to get on the Margate housing ladder, despite sky-high mortgage rates.
First-Time Buyers Statistics
Using data from the Office of National Statistics, Land Registry and the Bank of England, of the 535 properties bought in the last 12 months in the Margate area, 145 were bought by first-time buyers.
With just under 1 in 3 house purchases made by first-time buyers in the last 12 months, it might surprise many that this has been steadily growing since 2010 when only 1 in 5 house purchases were made by first-time buyers.
Surprisingly, first-time buyers have remained the most resilient group of property buyers, even during these difficult times.
The Rental Market
Usually, first-time buyers would be the most affected in times of stress in the property market (like in the last two property market crashes of 1998 and 2008). However, this time is different. Despite the sky high mortgage rates, the rental market and its high rents are making buying a more attractive option for many Margate renters.
In Q1 2021, the average rent in the Margate area (CT9) was £786 per month. The Margate area rental market has experienced soaring rents in the last two years, with the average rent increasing to £1,080 a month in Q1 2023, an increase of 37.4%.
Reasons for Rising Rents
- Higher mortgage rates for landlords, passed on to tenants in increased rents.
- Some Margate landlords with high % mortgages are selling their buy-to-let portfolios because of the Section 24 taxation rule changes and leaving the market entirely.
- Another reason is fewer landlords are buying rental properties to let out, with only 1 in 8 house purchases being made by landlords.
Demand for Rental Properties
Meanwhile, demand for Margate rental properties is high. With demand outpacing supply, some Margate renters are forced to accept higher prices or offer more than the asking price to secure new tenancies. Other Margate
This situation has made many Margate renters move forward with their plans to buy a home for themselves, despite the increasing costs of home ownership.
Deposits and the 'Bank of Mum & Dad'
It appears the 'Bank of Mum & Dad' are helping first-time buyers with their deposits. The national average deposit paid by first-time buyers was just over £63,000 in January '23, which was 23.4% of their purchase.
Mortgage Rates
The lowest rate for a two-year fixed first-time mortgage with a 23% deposit is 4.13%, up from 2.86% a year ago.
Reducing Monthly Payments
So, how can Margate first-time buyers reduce their monthly payments? They can do it by increasing the length of their mortgage. For example, increasing your mortgage term from 25 to 30 years will save you £45 per month in mortgage payments for every £100,000 borrowed.
Eleven out of twenty first-time buyers are taking out mortgages of 30 years or more, the highest level since records began in 2005.
Low Deposit Buyers
But what about those buyers with a low deposit? According to the Moneyfacts website, the number of available 95% mortgage deals has risen from the early 160s in early March to nearly 210 last week. This is the highest level since September 2022, showing that banks are not worried about a property price crash. Moreover, the Coventry and Nationwide Building Societies have reduced their mortgage rates on low deposit (90% to 95%) mortgages over the past few weeks. The average 2-year fixed 95% mortgage is 5.64%, and the best rate is 4.9%.
However, Skipton Building Society has even launched structured products for certain first-time buyers that will not need a 5% deposit if the buyer can prove their rental history (about time too if you ask me).
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