First Time Buyers in 2012

by Mark Johnston

Some lenders expect the availability of secured credit in households to increase slightly in 2012, with the rise concentrated on borrowers with high loan to value (LTV) ratios.

The HSBC has announced that it will lend a minimum of £15 billion in mortgages, with £3 billion dedicated to first time buyers.

Therefore it seems 2012 looks set to offer at least some new lending opportunities as new and more accessible products come on to the market.

According to moneyfacts, a comparison website, there are currently around 49 mortgage deals available at 95% loan to value (LTV) which is more than double the 24 on the market in January 2011.

Also in the last 2 years the number of deals available to those with a 10% deposit has increased from 114 to 332.

Although the loan to value (LTV) tier with the biggest choice of mortgages is 60% with 393 deals, this is a rise from the 271 in January 2011.

However, despite the increasing number of mortgages appearing on the market at the moment it seems that they are only around for an average of 27 days before being fully subscribed, compared with a historic average of 30 days. This goes to show that there are still not enough mortgage deals to satisfy demand.

Experts have warned however that while lenders have promised to increase the number of deals available to first time buyers (FTB) many will still struggle to get a mortgage

This could provide a lifeline to would be home owners stuck in expensive rental property.

With many mortgage brokers predicting that half of all would be borrowers with a 10% deposit, will be refused a loan.

Aaron Strutt, adviser at broker Trinity finance said,”lenders have been offering more low deposit mortgages. However , borrowers still need an excellent credit score to qualify for one of these deals”.

David Newnes, director of LSL property services suggests “with the mortgage market facing challenges from the euro zone crisis and the sluggish wider economy, the number of first time buyers able to secure finance is not about to rocket up”.

Martijn Van Der Heijden, head of lending at HSBC,has said ” while some estimates suggest mortgage lending in the UK will fall this year. HSBC has no intention of closing its doors to customers, nor will we compromise our reputation for responsible lending.”

This lending commitment would mean that the HSBC would have the largest market share it has ever had and potentially push the direct only lender past Nationwide to become the fifth biggest mortgage lender.

A Nationwide spokesperson said “ Nationwide focus for 2012 will be to continue to support the first time buyer.”

In 2011 1 in every 4 mortgages approved by Nationwide was to a first time buyer.

Another high street bank trying to lure borrowers is the Halifax, they are offering fee free mortgages.

David Hollingworth, at mortgage broker London and Country says “the advise for first time buyers is still to save as large a deposit as possible which will help secure a wider choice of lenders and better rates as a result”.

Last year the number of mortgages actually approved dropped by a third compared with 2006, and its predicted that this year will be similar.

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