mThe number of mortgages available for first time buyers is dwindling according to a recent report, dealing yet another blow to the many first time buyers that are already struggling to get onto the market.
First time buyers waited years for house prices to start falling, which they eventually did a couple of years ago, but along with these house prices falls came the global credit crunch, which resulted in lenders becoming far ore stringent about their lending criteria and meant that most first time buyers had to find enormous deposit levels that they simply could not afford in order to get anywhere near getting a mortgage.
According to a recent report the number of mortgages available to first time buyers with a deposit of just 10 percent has fallen by a massive 97 percent in the last thirty months, leaving many first time buyers high and dry.
In the past first time buyers were able to get 95 percent, 100 percent, and even 125 percent mortgages, but this is no longer the case, and most will now struggle to get even a 90 percent mortgage. The average interest rates that are being charged on first time buyer mortgage has also increased, even though the base interest rate is still at an all time low of just 0.5 percent.
One industry official stated: ‘The Government has failed to get mortgage lenders to open their books to first-time buyers. A 10% deposit is all most first-time buyers can hope to afford, so by pulling 90% LTV deals off the shelf, and increasing rates on the remaining deals, providers are keeping first-time buyers out of the market – which simply exacerbates market stagnation.’
She said that lenders were focussing too hard on securing larger deposits, adding: ‘However, if they were to take a more balanced view and place as much importance on affordability and credit profile, they could offer competitive deals with a higher LTV to those who clearly demonstrate they can and will make the required repayments.’