Lending landscape miserable for first time buyers but hope glimmers

Mortgage lending facts paint a sorry picture for first time buyers but market conditions offer more and better options for first time buyers and their parent-benefactors.

Results published today by The Council of Mortgage Lenders (CML) reveal that in July 2011 there were fewer loans being made to first time buyers than in the month previous and in July 2010. Further, deposits required by the lenders remain high at around 20% of the property value. In addition, first timers are borrowing a significant 3.18 times their annual salary.

Helen Adams Director of the on-line advice centre for first time buyers FirstRungNow.com comments: ‘With the lenders requiring a hefty deposit which is hard for aspiring home-owners to save for, there is a great demand for parents to help out. We’ve just carried out a survey amongst over 320 such youngster and 92% of them believe that only those with wealthy parents will be able to compete in the ‘property race’. That’s possibly true but with many parents having gained from the increase in their own property they may well be in a position to help.’

The CML report goes on to state that remortgages rose in July 2011 on the previous month and the July 2010. Adams continues: ‘The rise in remortgages is undoubtedly down to lower interest rates, some good fixed rate offers and the requirement to help ‘children’ wanting to buy their first home. Parents helping with the deposit and the mortgage is not new but a number of mortgages have recently been launched that tap specifically into this need and this will start to open up the market for first time buyers again’.