Over recent months there has been a great deal of speculation over house prices in the UK, with the general consensus being that house prices are set to fall by as much as 20% over the next year or two. With house prices having soared by 200% over the past decade, this may seem like a drop in the ocean – particularly considering that the average income has only gone up by around 53% in the same period. However, it is the news that many first time buyers have been waiting for, as for many falling house prices meant that they could finally look at getting their foot onto the first rung of the property ladder.

However, it seems that the elements are still against would-be first time buyers – just as house prices start to fall a range of other factors have made it more difficult for this group to start thinking about homeownership. In fact, it has now reached the stage where officials from the homeless charity Shelter have claimed that first time buyers are facing their toughest challenge ever when it comes to getting onto the property ladder.

One official from Shelter recently stated: ‘Despite falling house prices, many lenders are increasing their mortgage rates, making an already desperate situation worse. It means there is a generation of young people and young families being locked out of the housing market without a hope of ever sharing in the asset wealth of the generation before.’

So, just what factors are holding first time buyers back now that house prices are falling? There are three recent changes in the world of mortgages that have made it very difficult for the average first time buyers to purchase a home. These are:

Difficult credit conditions: Since the onset of the global credit crunch last summer lenders have found it increasingly difficult to secure finance to fund their mortgage lending operations, and because of this they have had to really tighten up on their lending criteria. Lenders are being choosier than ever with regards to who they will lend to and how much they are willing to lend, and this has really affected the ability of many first time buyers to get onto the property ladder.

Withdrawal of mortgage products: Lenders have withdrawn many mortgage products from the shelves over recent months, and compared to a year ago the number of mortgage products available has dropped by two thirds. Amongst the products that have been taken off the shelves are 125% and 100% mortgages, both of which were very popular amongst first time buyers in the past.

Higher deposit requirements: One of the things that can make it difficult for first time buyers to get onto the property ladder is getting deposit together, as first time buyers have no previous property from which to take equity to put towards a deposit. Now that 100% mortgage are gone things are already difficult for first time buyers. However, many lenders are now demanding higher deposits of 10% or more, and this means that even getting a 95% mortgage has become more difficult.

Recent additions:

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