First-time buyer mortgages disappearing
It has been revealed that over the last two and half years, home buyers looking to place a 10% deposit on a property have seen the number of mortgage deals available decimated by 97%. Currently only 102 mortgages are available to first-time buyers looking to place down a 10% deposit, down from nearly 3150 just two and a half years ago. While it was inevitable there would be some decline in the number of deals available, the massive reduction has prompted surprise across the sector.
Ultimately it will be first-time buyers, the new blood of the property market, who will facilitate a recovery in the UK property sector. Unfortunately at this moment in time there are significant liquidity issues and many UK banks are unwilling to take 90% loan to value mortgages. Until we see an increase in the number of first-time buyer mortgages available it is unlikely that we will see a strong recovery in the sector.
It has also been revealed that in January 2007 the average first-time buyer mortgage rate was around 6.2%, with base rates at 5%. When you consider that UK base rates are now at 0.5% many people will be dismayed to find that the average first-time buyer mortgage interest rate is a relatively high 6.23%. Quite how the sector can justify such moves in mortgage interest rates is open to debate but a mystery to many.
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