First-time buyers taking more risks
MONEY OBSERVER - 1ST MARCH 2004
First-time buyers could be risking running into costly problems further down the line in order to put as much money as possible towards the purchase price of their property.
According to a survey by Yorkshire Bank, more than one in eight (13%) admit their finances are so overstretched they’d be unlikely to go to what they deem the ‘unnecessary expense’ of getting a full survey done. In contrast, only one in 20 (6%) experienced house-buyers would consider skipping getting a full survey to save money.
Yorkshire Bank’s quarterly House –buyers Survey reveals that rather than significantly dampening property prices, interest rate rises in 2004 will squeeze determined buyers’ already overstretched finances even tighter.
Nearly three out of four house buyers (71%) admit they readily anticipate further interest rate rise this year, yet their determination to move house in 2004 is undiminished. Indeed, according to the bank’s survey, the number of people intending to buy a house in the next 12 months has increased from 11% last quarter to 14% currently.
First-time buyers are now half as likely as the average house buyer to opt for a short-term fixed rate and, appearing to be tempted by the lower variable rate deals still around, are more likely to go for a flexible variable-rate mortgage.
Geoff Greer, Yorkshire Bank’s chief operating officer said, ‘First-time buyers seem to be taking more risks to afford their first home. And in their desperation to get on the property ladder, many are prepared to leap in immediately with an offer at, or above the asking price.
Mortgage lenders are selling expensive and unsuitable mortgage payment protection insurance with their mortgage, according to a survey by Burgesses.
According to Burgesses, the average cost of mortgage payment protection insurance from the major lenders is double that charged by independent providers. Lloyds TSB was the worst culprit, with a premium of £7.70per £100 of protection. More shockingly, only one lender asked about medical history or informed Burgesses staff that pre-existing medical conditions are automatically excluded from mortgage payment protection insurance.
