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News: Desperate Brits do whatever it takes

Tue, 04 Sep 07

The desire for homeownership is stronger than ever and comes at almost any cost, according to new report...

  • 9% of first time buyers believe interest rates will continue to rise but they are not deterred.

  • First time buyers are working longer hours and forsaking almost everything to make that first hike up onto the property ladder.

  • They are also entering into bidding wars or sealed bids to secure a property.

Bradford & Bingley's fourth annual First Time Buyer Report*, based on the UK's largest survey of first time buyers, reveals a snapshot of hopeful homeseekers willing to put their lives on hold in order to get onto the ladder.  Rising interest rates, high property prices and growing debt levels are doing little to deter would-be homeowners, even though it's taking 44% between two and five years to realise their dream.

Rising interest rates

Even with the Bank of England Monetary Policy Committee raising the Base Rate five times in the last year and predictions of at least one, if not two further rises to come, first time buyers are determined to still buy. 79% of those asked said they were sure rates were to rise but that wouldn't stop them from continuing with their search for a home of their own.

With the desire to own a home stronger than ever, first time buyers are forsaking almost everything to become homeowners, including their free time.  In order to raise extra funds 1 in 5 (20%) are putting in extra hours at the office with a further 12% holding down second jobs, either in the evening or at the weekend.

Carefree makes way for compromise

For many first time buyers owning a home means saying goodbye to carefree days of socialising and holidays.  Thrifty would-be homeowners are cutting back on or sacrificing luxury goods (61%), going out to bars and restaurants (57%) and holidays (56%) in order to afford their first home.

After all the sacrifices though, over half (52%) of all respondents still feel as if they are compromising more than they expected to.  40% are having to choose properties further out of town, with 28% forced into settling for less desirable areas. 

There are even a resolute few that are buying property, which they plan to rent out, in different areas of the country (10%) or even abroad (2%) such is their desire to join the homeowning classes.

Mum and dad asked to lend a hand

Even the family silver doesn't escape the sights of first time buyers with over a third (35%) seeking financial help from parents to get onto the ladder sooner.  Of these, 57% are raiding their parents' hard-earned savings and 11% are buying jointly with their parents.

Nearly a fifth (18%) have moved back in with their parents to save money on rent in order to add to their 'house fund'.  A very generous 5% of parents are remortgaging their homes to provide their offspring with much-needed cash.  An astonishing 2% of parents are paying for the whole property outright.

Undeterred by high prices

Such is their determination that even concerns about high property prices and rising debt levels are not holding these potential homeowners back.  Three-quarters (74%) are motivated simply because they want a home of their own, despite 55% saying that high prices mean that they're struggling to afford the property they want. 

79% have debts hanging over them (up from 49% a year ago) with 17% owing in excess of £15,000 principally on credit cards and student loans.  Clearly nothing appears to be dampening the desire to buy.

War of the houses

A significant number of those who have managed to buy recently have gone straight in at the asking price (20%) or even over the asking price (9%) in order to secure their first home. 

One in four (26%) have entered into a bidding war or a sealed bid situation to try and wrap up the sale.  36% have offered up to £10,000 more with 15% offering between £10,000 and £40,000 over the asking price.

Bidding wars throughout UK

Bidding wars are taking place up and down the country as first time buyers struggle to secure a sale. The top five regions are:

REGION

% of FTBs involved in bidding wars or sealed bids

Scotland

45%**

London

29%

South East

29%

West Midlands

27%

East of England

24%

Those least likely to bid for their potential homes were first time buyers in Wales,where only 16% found themselves in a bidding situation.  Welsh homebuyers were also the least likely to offer the asking price, with only 7% doing so in order to avoid being out-bid. 

In contrast, over a third (36%) of first time buyers in the North East, closely followed by 34% of first time buyers in the East of England, went straight in at the asking price to secure their property.

Commenting on these findings, Andy Wiggans, director of mortgages for Bradford & Bingley, said: "Homeownership is part of the nation's fabric and it seems the desire to own one's own home is stronger than ever. It's clear that many first-time buyers are willing to make lifestyle changes in order to make the financial commitment needed to buy a home.

"The good news is that there are now many competitive, flexible mortgage products on the market which can help people make that step up.  However, first time buyers have to be careful not to overstretch themselves.  With possible interest rate rises on the horizon, people have to be realistic about what they can comfortably afford and not be tempted into borrowing more than is sensible."

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