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Are first-time property buyers the key to the UK economic upturn?

At this moment in time the first-time buyer of property in the UK is a very rare commodity as mortgage lenders look to pull up the drawbridge and reduce their short-term risks. Despite the fact that we have seen an increase in the number of first-time property buyer mortgage options over the last few days this is not a trend which the vast majority of mortgage lenders in the UK have yet taken up. Many appear happy to sit on the sidelines and reduce their own risk/reward ratio while the UK property market continues to struggle.

Until we see a significant return of first-time property buyers in the UK it is highly unlikely that we will see a sustained increase in UK property prices. As a consequence this will limit the scope for movement which existing property owners have with regards to either upgrading or downgrading their own housing situations. A further consequence of this situation is the fact that mortgage lenders will need to widen their profit margins because of a lack of volume in the UK mortgage market which then leads to reduced liquidity and something of a vicious circle.

The UK mortgage arena is a very finely balanced investment sector which could tip either way very quickly and with minimal movement in transaction numbers.

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