First time buyers remain alienated despite drop in asking prices
23 June 2009 / by Rebecca Sargent
House asking prices fell by 0.4 per cent this month, although they remain six per cent higher than they were in January. However, despite optimistic signs, first time buyers remain on the sidelines.
Fixed rate mortgage rates are on the increase, and as the Bank of England continues to hold the base rate steady at 0.5 per cent, the only way is up for variable rate mortgage deals, which is proving a stumbling block for first time buyers hoping to snap up reduced asking prices.
Commenting, Miles Shipside, commercial director at Rightmove said: “Given lenders’ tight lending criteria and their raising of fixed rates, the pool of potential first time buyers who can mop-up this less saleable stock, which includes repossessions, is reducing further.”
In addition, the deposit required from a first time buyer remains high, up from 11 per cent a year ago to 25 per cent now, according to the Council of Mortgage Lenders (CML).
Mr Shipside added: “Property deals appear within the grasp of cashstrapped first time buyers, but every rise in fixed rates frustratingly nudges them a bit further out of reach.
“Lenders need to be wary not to choke off the recovery in affordability and activity by punishing the returning buyers with ever widening margins.”
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