If you’re a first-time homebuyer in the UK, you’ve probably been keeping an eye on mortgage rates, wondering if now is the right time to take the plunge into homeownership. The good news is mortgage rates are finally starting to drop, and competition among lenders is heating up, which could work in your favour.
With major lenders like Santander and Barclays launching sub-4% mortgage deals (for those who meet the eligible criteria), and the Bank of England expected to cut rates further, many first-time buyers are asking: Is now the right time to buy?
In this blog, we’ll try to break it down:️
What’s happening with mortgage rates and why they’re falling️
What this means for first-time buyers️
How to take advantage of better mortgage deals️
The pros and cons of waiting vs. buying now
Why are mortgage rates dropping?
For the past two years, mortgage rates have been at historic highs, making homeownership more expensive. However, the Bank of England has started to cut its base rate, which directly influences the interest rates that lenders charge on mortgages.
Here’s why mortgage rates are falling:
Bank of England base rate cuts – The Bank of England recently lowered its base rate to 4.5%, and more cuts are expected in 2025.
Lender competition – With banks like Santander, Barclays, and Nationwide reducing their rates, other lenders will likely follow suit to stay competitive.
Market confidence – Many financial experts expect continued rate cuts, which makes banks more willing to offer better mortgage deals.
Lower mortgage rates mean cheaper borrowing costs, which can significantly impact how much you’ll pay for your home in the long run.
Contact Home at Last today to book a free consultation.
What does this mean for first-time buyers?
If you’re a first-time buyer, lower mortgage rates can make a huge difference in your ability to buy a home. But before you rush to apply, here’s what you need to consider:
The benefits of falling mortgage rates:
Lower monthly payments – A lower interest rate means your mortgage repayments will be cheaper, leaving you with more disposable income.
Increased affordability – Lower mortgage costs increase your borrowing power, allowing you to afford a better home than before.
More mortgage options – Lenders are becoming more competitive, offering better deals and lower deposits to attract first-time buyers.
However, not all first-time buyers will qualify for the best rates. Many of the new sub-4% deals come with high fees or require a large deposit, which could be a challenge.
Potential challenges for First-Time buyers
Strict lending criteria – You may need a strong credit score and a higher deposit to secure the best mortgage rates.
Short-term market uncertainty – While rates are improving, the housing market remains competitive, which could push house prices up.
Limited time to act – Rates can change quickly, so timing your mortgage application is key.
If you’re in a strong financial position, falling mortgage rates could be a great opportunity to secure a better deal and get on the property ladder sooner.
Should you buy now or wait?
With mortgage rates improving, many first-time buyers are unsure whether to buy now or wait for potentially even better rates later in the year.
Here’s a breakdown of the pros and cons of both options:
Buying Now – Why it might be a good idea
️ Lock in a lower mortgage rate before prices rise further.
️ Secure a property now while competition is still manageable.
️ Avoid further inflation that could increase property prices.
Waiting for further rate cuts – The risks & rewards
️ You might get a better mortgage deal later in the year.
️ House prices could stabilise if demand decreases.
️ More buyers may enter the market, creating competition.
️ If rates suddenly rise, you miss out on ‘today’s’ good deals.
If you find a home you love and you can afford it, securing a good deal now might be better than waiting for slightly lower rates that may or may not happen!
How to secure the best mortgage deal
If you’re a first-time buyer ready to take advantage of falling mortgage rates, here are the steps to maximise your savings and secure the best deal:
️
Check your credit score
A higher credit score means better mortgage rates. Check your score using Experian, or Equifax and improve it by:*Paying off credit card debt*Avoiding missed payments*Reducing credit applications before applying
Save for a bigger deposit
Many lenders offer the best rates to buyers with a larger deposit (15-20%). The more you can save, the better your chances of getting a competitive rate.
Explore Government Schemes
As a first-time buyer, you may qualify for:
First Homes Scheme – Discounts of 30-50% on new-build homes.
Lifetime ISA – A 25% bonus from the government to help with your deposit.
Shared Ownership – Buy a portion of a home and rent the rest at a reduced rate.
Speak to a Mortgage Broker
A broker can help you find exclusive deals that aren’t available to the public. Don’t just go for the lowest rate—check for hidden fees and long-term costs. They can also help improve your chances of approval.
What should first-time buyers do next?
1. Mortgage rates are improving, making homeownership more affordable for first-time buyers. The better prepared you are, the more likely you’ll secure a great mortgage deal and avoid costly mistakes.
2. Lenders are becoming more competitive, offering better deals—but not everyone qualifies for the best rates.
3. Buying now could help you lock in a great mortgage deal before prices rise further.
4. However, waiting might get you an even better rate, but competition in the market could also increase.
If you’re considering buying your first home in 2025, now is the time to start preparing.
Need advice?
Book a free consultation today with Home at Last we’re here to help first-time buyers like you navigate the process with confidence.
We look forward to helping you and making your dream of homeownership a reality.
Disclaimer:
This information is for general guidance only and does not constitute professional advice. The content is based on the author's research and opinions at the time of writing. Please consult with a qualified professionals before making any investment, financial, or business decisions.
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