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First time buyer help urged

First time buyer help urged

Category: Mortgages

Updated: 05/06/2009
First Published: 05/06/2009

This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.
The Association of Mortgage Intermediaries (AMI) has called for further Government action to help first time buyers after the Bank of England's decision to keep interest rates on hold at 0.5 per cent for the third consecutive month.

According to the trade body, what it calls an artificially low rate of interest will have to rise at some point in the future to more closely reflect the true cost of money and the returns required by investors.

Its concern remains that many potential first time buyers are being frozen out of the housing market by the lack of available mortgage.

"We would encourage Government, the Treasury and the Bank of England to work with the FSA to encourage a controlled return of greater funding which would allow good Building Societies to return to the market with competitively priced products at higher loan to value percentages," said Robert Sinclair, Director at AMI.

"Increased competition is required to ensure that consumers get good deals. Most mortgages are being funded by only six lenders currently and this is not conducive to good consumer outcomes in the longer term."

Forty per cent of home purchases were made by first time buyers in March, according to the Council of Mortgage Lenders, while numerous studies and surveys suggest increasing buyer enthusiasm.

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