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First time buyer market stirs to life

First time buyer market stirs to life

Category: Mortgages

Updated: 09/06/2011
First Published: 08/06/2011

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 It is now over 6 months old so the content may be out of date.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 first time buyer mortgage market is showing some signs of recovering, as the number of mortgages available has increased, while average rates have fallen. research has found that there are currently 183 mortgage products for first time buyers available.

It is a figure that has increased significantly over the last two years, reflecting a slight loosening of lending criteria at higher loan-to-value (LTV) tiers.

The number of first time buyer mortgages has risen from 62 in June 2009 and 139 in June 2010. Of the 183 products aimed at first time buyers, 31 are available to those with just a 5% deposit, up from 19 at the same point last year.

The Government recently outlined plans to work in conjunction with new homebuilders to offer mortgages to buyers with just a 5% deposit.

Many industry experts have called upon providers to launch innovative products aimed at first time buyers.

"It is clear that where innovation is most desperately needed is in the higher LTV market," said Ray Boulger, senior technical manager at John Charcol.

"I expect to see more schemes where parents or grandparents commit some savings to a lender, which takes a charge over them, allowing the lender to offer a 95% LTV mortgage at a much better rate due to the lower risk and capital adequacy requirements."

In addition, the cost of borrowing at higher LTV tiers has eased somewhat over the last two years.

The average first time buyer rate today is 5.22%, a fall from 5.37% a year ago, and 5.63% in June 2009.

"First-time buyers are often considered to be the life-blood of the housing market," said Louise Holmes, spokesperson for

"As well as high mortgage rates, many borrowers have found it incredibly difficult to find funds for large deposits, often entirely beyond their financial capabilities.

"Higher loan-to-value mortgages have made a return to the market over recent months, suggesting lenders are taking positive steps to help the first-time buyer market."

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