First-time home buyers are returning to the UK housing market, particularly one area they have avoided for some time. Of the house hunters shopping in London, 48% were first-time buyers this year and it was the largest proportion since at least 2010. The increase in attention on the capital city is partially due to lower interest rates on available mortgages. At the point when interest rates were historically low during the pandemic, buyers were looking outside of London, not in it. Now a shift has occurred and as mortgage rates have become more affordable, home buyers are shopping, even first-time hopeful home buyers in the capital.

Hopeful home buyers have to be creative in some instances to find a spot on the property ladder. Some are seeking help with deposits and other costs from the Bank of Mum and Dad and in many cases extending an out reached hand to other family members and friends. Some are teaming up with older family members and buying a multi-generational family friendly home to accommodate grandparents, parents, and / or a growing new family to spread the expenses and help more than the new home buyer. While there are others purchasing a home with friends, fixing it up, selling it, and taking the profit to repeat the process until all members have money to buy their own house. They share expenses in fixing up the home, as well as usual homeowner expenses which makes buying affordable and they can invest versus spend out on rent.

Home buyers shopping in the UK housing market have more positives than a few months ago, and this is causing experts to predict an uptick in purchasing. Mortgage interest rate offers are lower as lenders have become both optimistic and competitive. Offers have fallen below the recently reduced Bank of England’s standard base interest rate of 5.0%. Also, while inflation has slightly increased above the target rate of 2.0%, it is expected to remain near target offering relief that will trickle down and be felt by consumers soon. In addition to relief from lower inflation and lower interest rates, the supply of listed properties on the market has grown, which helps buyers have more leverage power than before. According to a recent report from Zoopla, the average estate agent has thirty-three unsold homes listed, which is the highest level since 2017.

For the first time since March 2020, the Bank of England’s Monetary Policy Committee (MPC) on 1 August cut the standard base interest rate. The rate, which had climbed from almost zero at 0.1% during the pandemic to 5.25% last year, had been raised in every consecutive MPC meeting from December 2021 through August 2023. In September 2023, the MPC rate setters voted to keep the rate steady hoping the 16-year high rate would do the work against inflation to bring it to target at 2.0%. Inflation did reach target and the committee voted this month to cut the rate by 0.25% to 5.0%. Now the question is will there be another rate cut and when?

It seems there are always decisions to be made as a homeowner. Those decisions can range from the simple to the complex, but perhaps none can keep one up at night more than a decision that involves money, especially when the wrong decision could cost the homeowner money, and the right one could save them money. This sort of decision is exactly at play currently for many homeowners considering whether to remortgage now or later.

The housing market is likely to see a spark of buying in the next release of data. There are many reasons for home buyers to take a better look at the market now. One reason is interest rates dropped as the confidence in a sooner rather than later cut to the standard base interest rate was expected by the Bank of England’s Monetary Policy Committee (MPC). Lenders did not even wait on the MPC and dropped their offered rates with some doing so to a lower level than the outcome forecasted when the MPC would finally have the majority vote to cut the rate.