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First time buyers seeking advice in their droves

First time buyers seeking advice in their droves

Category: Mortgages

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

MONEYFACTS ARCHIVE
This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.
First time buyers are seeking advice in their droves, with demand hitting a 16 month high.

In recent months, there has been a drip feed of new products at higher loan-to-values (LTVs) in the mortgage market.

Since June, Nationwide, Northern Rock, Chelsea Building Society and Saffron Building Society have all launched new products for buyers with 5% or 10% deposits.

At the end of last month, Moneyfacts.co.uk figures showed that there was double the number of 95% LTV products compared with the same point a year before.

And just this week, Aldermore launched a new mortgage that offers buyers 100% of the value of a property, as long as a family member is prepared to guarantee any borrowing above 75% LTV.

The product launches come as the Government looks to roll out its new first time buyer initiative, which will see it team up with housebuilders to boost first time buyers' deposits in the form of a loan that is only paid back once the buyers re-sell their home.

The activity appears to be striking a chord with would-be buyers, as figures from unbiased.co.uk show that more than four in ten (41%)
of all requests for mortgage advice came from first time buyers in August, up from 38% in July.

Remortgage advice dropped slightly from 36% in July to 33% in August but continued to drive a high number of enquiries.

"As a result of mortgage rates and property prices falling, there is no better opportunity for first time buyers to get their foot on the property ladder," commented Darren Cook, mortgage expert at Moneyfacts.co.uk.

"But strict credit criteria, large deposit requirements and less favourable interest rates at higher loan-to-value bands remain a stumbling block for many first time buyers.

"The mortgage market can be a minefield and it is encouraging to see that a growing number of first time buyers are choosing to seek good advice before committing to one of the biggest financial decisions of their lifetime.

"It is not surprising to see that advice sought on remortgaging has fallen while base rate remains at its historical low.

"Many existing mortgage holders are currently paying very low rates and there is very little motivation for them to remortgage to another deal."

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Disclaimer: Information is correct as of the date of publication (shown at the top of this article). Any products featured may be withdrawn by their provider or changed at any time.

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