Posted on 5 May 2017 by
“An Englishman’s home is his castle.” So the old saying goes, but why do we place such value on owning our own home? Just what drives us as a nation of homeowners?
Recent figures from the English Housing survey revealed that in 2015-16, 59% of private renters (around 2.6 million households) and 27% of social renters (1.0 million households) stated that they expected to buy a property at some point in the future.
This optimism, despite the fact that barely a half of all families in Britain own their own home, shows that we, as a nation, still gravitate towards the dream of owning our own plot of land that we can call home. And recent research from Tesco Bank found that the biggest three reasons why people want to own their own home were very simple:
Despite the doom and gloom about how difficult it is for many would-be buyers to get on the property ladder and how we need a correction in property prices to enable these buyers to afford a home of their own, the research by Tesco Bank found that 67% of us still feel that in the long term, having our own place will bring us a good return, as well as security for our family.
One of the biggest reasons for this statistic is likely to be that property is still the simplest and easiest form of investment. Unlike pensions and equity-related savings plans which are far more complicated and difficult to understand for the average person in the street, property is relatively straightforward.
Price growth in your home will almost certainly outpace rates that most savings accounts offer too. The returns are very well reported, pick up a paper, almost any day of the week, and there’s likely to be a housing market story with statistics attached.
So all-in-all, property combines an easy to understand investment that tends to provide decent low risk returns, as long as you go for the right location.
It also appears that many potential buyers are willing to cut back and make sacrifices on certain areas, such as holidays, and social spending to help them save the necessary deposit to get them on the ladder. In the survey by Tesco Bank some 43% of those considering buying a property in the next 12 months are cutting back on the number of holidays they go on, while 50% are spending less on socialising. Almost a third (29%) of people in this position are taking steps to reduce their shopping bills or using discount websites to make savings.
But while we may be willing to cut back on our spending in one area where we aren’t willing to compromise on is location, with 48% saying that they’d wait to buy if they can’t find a property in the right area.
The process of applying for a mortgage was identified as being the source of a substantial amount of stress. When applying for a mortgage the majority (42%) of those who bought a home in the past 12 months highlighted that getting the best possible rate was their main driving force, while 27% said that even getting a mortgage offer at all was the most important thing.
Alarmingly however, only 17% said “receiving valued guidance from a financial adviser”, was most important to them in the home buying process, which begs the question, how do you know “what the best possible rate” is without speaking to a broker?
The cheapest rate, is likely to have a larger arrangement fee, or if you go for a deal with no arrangement cost it’s likely to have a higher rate. Then there is the question of fixed or variable? Two, three, five year or longer? It’s a minefield unless you have advice using the knowledge and research from an independent expert you can trust!
The fact that we are a nation of home buyers is fantastic. And it’s important not to believe everything you read in the paper. Getting on the property ladder is tough, but it’s not impossible.
Stats from the UK Housing report show that in 2015 there were around 654,000 first time buyers in England. That is, buyers who had bought for the first time in the last three years, up from about
564,000 in 2014. While numbers have fluctuated over last decade, the number of first time buyers in 2015/16 was roughly the same as the number in 2005-06 (675,000).
To anyone looking to get the keys to their own castle getting advice from an independent mortgage adviser at an early stage is key. Choosing the right deal and knowing what products are available isn’t like pinning the tail on the donkey! If you’re looking for the “best” mortgage rate it’s always worth speaking to an expert.
To view the full report from Tesco Bank click here.
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The blog postings on this site solely reflect the personal views of the authors and do not necessarily represent the views, positions, strategies or opinions of John Charcol. All comments are made in good faith, and John Charcol will not accept liability for them.