by Mark Johnston
Those first time buyers who are still hopeful of getting a foot on the housing ladder still do not expect to be in a position to secure a mortgage until they are at least 38 years old.
Clare Francis, spokesperson at moneysupermarket.com said “the housing market has been hugely affected by the credit crunch and economic downturn and unfortunately the first time buyer has been hit the hardest”.
John Cridland, director general of the confederation of British industry (CBI) wants to see the chancellor use his autumn statement to jump start the housing market. Cridland believes “a determined attack on the major blockers of finance and planning could transform the outlook of a generation of young people and provide a huge flip to consumer and business confidence.
Data recently released has shown that the average deposit required from first time buyers has doubled since 2007.
There has been little change in lending criteria in June 2011, first time buyers paid on average deposits of 20%; this has remained unchanged since February 2011. Deposits for first time buyers are however lower than the high 25% seen through most of 2009 and 2010, but they are still higher than the historic norm of 10%.
The council of mortgage lenders (CML) data has shown however that borrowing activity for first time buyers was the highest in June 2011 for 10 months. The number of loans was 24% higher than the preceding month but 6% lower than June 2010.
Borrowers who have little or no deposits find that lenders have stringent checks now and they need to fit all the banks and building societies criteria to be accepted for a loan.
Anyone wanting to get on the property ladder at the moment and is currently renting or living with parents should realise now it is important for them to think about how they can make cutbacks in order for them to build up a decent deposit more quickly. The majority of first time buyers in this position are struggling to save anything without help from their families.
Most high loan to value (LTV) mortgages are taken out by first time buyers, even though the rates on these loans are much higher than on lower loan to value (LTV) loans. There are though still some reasonable deals to be found on the market at the moment.
Following a recent relaxation in the property market those with little or no equity have more choice for mortgages.
The number of mortgage products available for first time buyers has increased by nearly 200 over the past year to 1,581, although it is still a fraction of the 14,940 available prior to the credit crunch.
One of the few lenders to offer mortgages to those with only a 5% deposit is Cambridge building society (borrowers must live or be buying in the area to qualify), they offer a 3 year fixed rate at 5.59% and a fixed 5 year rate at 5.99%; both carry a £599 fee.
The reality for first time buyers is that although there is widespread sympathy for their plight they are only one of a number of borrowers experiencing difficulties in challenging housing and mortgage market conditions.
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