An estimated third of employees spend at least some of their week working from home with high speed broadband rising up the criteria list for new house buyers. Evidence suggests that broadband speeds could affect the price that buyers end up paying for their next move.
An analysis of average house prices and broadband download speeds by local authority reveals that buyers spend, on average, 17% more for properties in areas with superfast broadband compared to areas where average speeds are less than 25 Mbps.
Some of this will be related to where broadband providers have historically focused their investment, ie, in more affluent areas, but with the major providers increasing their coverage, this effect will become more diluted. Indeed, the Government has committed to provide superfast broadband (at least 24Mbps) to at least 95% of UK premises.
There are a myriad of factors that affect local property prices but the influence of broadband speeds should not be underestimated with its importance to buyers set to continue to increase.
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95% loan-to-value mortgages improve
For today’s First Time Buyers, one of the biggest challenges involved in trying to get a foot on that elusive property ladder is raising the deposit.
With house prices seemingly on the increase all the time, even getting together 5% of a property’s value can equate to thousands of pounds, and securing a 95% mortgage has also traditionally meant having to accept considerably higher rates than borrowers at the other end of the market with plenty of equity.
Recent reports however have shown an almost five-fold increase in the number of deals available up to 95% loan-to-value over the last couple of years, helped in part by the introduction of the Government Help to Buy Mortgage Guarantee scheme in 2013.
This initiative is due to end this year, but certainly seems to have done its job in terms of reviving what has generally been considered an under-served area of the mortgage market. The range now on offer to borrowers is considerable, and is set to continue whether Help to Buy is extended or not.
Not only are there now more deals available for those with smaller deposits, but interest rates have also reduced over the last few months. Rates at lower loan-to-values have already hit rock bottom, and as a result lenders have begun to look at the ‘riskier’ end of the spectrum. With more lenders and more deals, comes greater competition, and this can only be welcome news for First Time Buyers.
Of course potential borrowers will still be required to demonstrate that a mortgage is affordable, and pass the necessary credit checks. The Mortgage Market Review has resulted in tougher lending criteria and underwriting procedures across the board, but this in itself has given lenders a greater level of confidence to compete more actively for business.
Saving for a deposit is still a difficult task, but with a greater number of deals and lower interest rates on offer, the boost from Help to Buy has been a noticeable one, leaving the higher LTV market in a much healthier place.
If you are considering a high loan-to-value mortgage and need mortgage advice, then please speak to the Guild Mortgage Service provided by fee free L&C Mortgages.
You can contact L&C mortgages on: 0800 073 1945
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