First time buyers - credit crunch a blessing in disguise?

The media is full of stories saying how tough it will be for a first time buyer to get a mortgage in the present economic climate.

Andrew Hagger of Moneyfacts.co.uk looks at how the current mortgage crisis may benefit those potential first time buyers who are prepared to bide their time and knuckle down to save that much needed 10% deposit.

"According to recent figures from Shelter, the average first time buyer property costs £169,285 in the East of England, £124, 019 in the East Midlands and £258,756 in London.

"With the current levels of uncertainty and volatility surrounding the mortgage industry and the housing market, maybe it's worth sitting on the sidelines and saving that 10% deposit until the stormy clouds blow over.

"If property prices were to fall by 15% in the next 18 months, (which is conservative compared with some estimates), then those who are itching to get their foot on the housing ladder could benefit from a double whammy of very high savings rates and the falling cost of that elusive first property.

"Savings rates available are currently at a seven-year high, with rates of over 6.5% gross easily attainable. If you plump for the specifically designed home saver account from Britannia BS, you can currently take advantage of a deposit-busting rate of 7.25% gross.

"Also, by saving regularly over 18 months, you will prove to yourself and more importantly any prospective lender that you are capable of affording a monthly mortgage repayment of a similar amount.

"With house prices having trebled over the course of the last ten years and first time buyers finding it especially tough, resisting the urge to jump in now may be a strategy that works to their advantage in the longer term."