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FTBs missing out on affordable homes

FTBs missing out on affordable homes

Category: Mortgages

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

This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.

First time buyers are still struggling to make their way onto the property ladder, despite houses being at their most affordable for wannabe homeowners for eight years.

Almost half of towns and cities across the UK are currently affordable for first time buyers, according to the latest Halifax First Time Buyer Review.

The research found that the average house price paid by a first time buyer in June was affordable for someone on average earnings in 48% of all local authority districts.

The figure is the highest proportion seen since 2003, and compares with 40% in 2010 and just 6% in 2007.

Yet despite the startling improvement in affordability, the number of first time buyers entering the market remains constrained.

It is estimated that there were around 86,000 first time buyers in the first six months of 2011, 10% fewer than in the same period in 2010, and close to half the number in the first six months of 2007.

Stopping most people from their first experience of homeownership is the need to find an average deposit of more than £27,000.

The average lump sum put down by first time buyers during the first half of the year of £27,719 is equivalent to 21% of the property price.

However, the situation has improved on the same period last year, when average deposits amounted to £30,251.

At the same time, there are signs that more mortgage products for buyers with smaller deposits are becoming available.

The latest data from Moneyfacts.co.uk shows there are currently 326 products available at 90% loan-to-value and above, which therefore require a deposit of just 10% or less, up from 222 at the same point last year.

"The significant challenges in raising a deposit and widespread pessimism about the chances of being accepted for a mortgage are clearly preventing some potential first time buyers from even attempting to get on the ladder," said Stephen Noakes, commercial director at Halifax Mortgages.

"However, these latest figures show there are opportunities for those who do want to buy their first home."

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