First-time buyers hit by lenders’ caution

Number of first-time buyers drops to lowest level for a year as mortgage lenders freeze out those with small deposits The number of first-time buyers fell in September 2011 to the lowest level in almost a year as a result of mortgage providers approving fewer loans for borrowers with small deposits, according to the latest e.surv mortgage monitor. Mortgage approvals in the cheapest price bracket (up to £250,000, which is considered typical first-timer property) accounted for only 22% of the total market in September, the lowest since November 2010 and well down on the 30% seen in 2006 when the housing market was near its peak. Approvals for mortgages with a deposit of 25% or under fell to their lowest number since February, at 33.5% of all loans approved for purchase, compared with 43.2% in September 2007 The average loan-to-value in the cheapest price bracket fell to 66% – far below the 76% LTV seen in September 2006, as borrowers found it harder to secure mortgages with a smaller deposit. E.surv said the decline in lower-income buyers fuelled a 1.7% total fall in mortgage purchase approvals in September, to 51,524, down from 52,410 in August. But approvals on homes in all price brackets above £250,000 remained steady. Richard Sexton, business development director of e.surv , said: “With the economy in peril from every angle, lenders are playing it safe and training their sights on wealthier borrowers. But for those who can access mortgage finance, life is particularly sweet. “Lenders are falling over themselves trying to offer the lowest fixed-rate deals, and the good news is that they look odds-on to remain particularly cheap for the foreseeable future. But that won’t be of much comfort to first-time buyers who can’t build the big deposit required to access these rates.” Matt Griffiths of first-time buyer campaign website PricedOut.org.uk agreed that conditions were leading to a widening gap between homeowners and prospective buyers. He said: “For those blessed with home ownership, very low bank rates are giving large cash windfalls whilst saving capital values from sharp falls. But for those not on the ladder the financial storm is hitting their ability to get a mortgage whilst rental inflation hits their ability to save.” The research came as lender HSBC announced it intended to make £350m of lending available to borrowers with small deposits. Separate research from LSL Property Services showed a 0.3% fall in house prices in September. David Newnes, director of LSL, said the modest summer recovery in the housing market “came to an abrupt end in September”. He added: “There are still serious barriers to a sustained property market recovery. Outside London, prices are falling throughout England and Wales and this has contributed to a fall in the average house price.” First-time buyers Property Mortgages Mortgage lending figures Housing market Real estate Mark King guardian.co.uk

Posted by on October 14, 2011. Filed under News, Politics, World News. You can follow any responses to this entry through the RSS 2.0. You can skip to the end and leave a response. Pinging is currently not allowed.