Lenders are Saying Yes to First Time Buyers Again

by Mark Johnston

New reports are starting to show that things are on the up for first time buyers. Recently the Halifax reported a drop in the monthly cost of mortgages and many lenders are starting to offer great deals for borrowers with much smaller deposits.

Stephen Noakes, the commercial director for mortgages at the Halifax said: “Despite perceptions, eight out of 10 first-time buyer mortgages are approved”.

Many first time buyers are still but off from even applying for a mortgage let alone looking for a property to buy as they are still seeing lenders asking for very large deposits.

Many lenders are starting to lower the deposits required to get a mortgages but the cost for these types of loans are still very high when compared to the rates on deals that ask for 30 to 40% deposists.

Andrew Hagger from Moneynet, an online financial website said . “The competition which has driven rates lower in the mainstream mortgage market has started to filter through to first-time buyer deals and even though many of the better rates are reserved for those with at least a 25 per cent stake to put down, we are seeing more choice and some lower pricing at 90 per cent loan to value,”

Melanie Bien agreed with this view by saying “”There is more choice of product for those with a 10 per cent deposit than there was a year ago,” she reports. However, she warns that borrowers will still have to pay a premium on the rate. “The other problem with high loan to value deals is that the credit scoring is much tougher than for those with a bigger deposit, so many applicants who have had no credit problems in the past, find that they are rejected.”

Lenders are starting to provide alternative ways of financing property. Young first time buyers are now able to get their parents to secure their house loan against either their savings or their own property

Lloyd’s TSB version of this scheme is called lend a hand, under this scheme the bank will lend up to 95% of the value of the house. Andrew Hagger explained “”Because the bank is in effect only advancing 75 per cent of the value of the property by taking a legal charge over the parent’s contribution, their risk is far lower than with a traditional 90 per cent advance and this is reflected in less punitive interest rate,”

Other first time buyers are looking to property developers to offer a helping hand. Many new builds only require a 5% deposit or provide financing for the deposit. Many developers are now offering such schemes to get people onto the market and buyer their homes again.

Alongside help in house financing for first time buyers, there is also help available to make the process of buying a house easier. Nationwide Building Society has launched a new guide to help buyers through the process. Caroline Hallatt, Nationwide’s head of corporate responsibility said: . “We wanted to help first-time buyers by giving them an overview of what they need to know in every day language and to make it available all in one place,”.

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