June 22, 2009

First Time Buyers Out In The Cold

The number of mortgages for people with less than 10% downpayment have dwindled to almost nothing as more and more first-time buyers are left out in the cold.

Since January 2007 the number of mortgage products available at 90% loan to value has fallen by 97%, figures from moneysupermarket.com show. The website says just 102 mortgage products are currently available at 90% LTV compared to 3,148 such products two and a half years ago.

Moneysupermarket.com says rates on 90% LTV deals have actually increased marginally over the same period, despite the base rate falling to just 0.5%. It also says that in January 2007, the average 90% LTV mortgage deal was just 1.2% above the Bank of England base rate, the average difference now is 5.73%.

Louise Cuming, head of mortgages at moneysupermarket.com, says: "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.

"Lenders remain for the most part entirely focused on how large a deposit potential borrowers can provide. 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."

There is no doubt that it is very hard to get a foot on the ladder, but with some help and some good advice it is possible. By talking to a mortgage adviser you may learn ways to help your money grow, so as to be able to afford your first mortgage. It might mean investing or taking out another financial product, but whatever you do, an adviser will steer you on the right path.

SOURCE: Moneysupermarket.com, 13/06/09

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