Some might think of the recent decline in house prices as an opportunity for first time buyers to get a foot on the ever-elusive property ladder, but any window of opportunity in the first time buyer mortgage sector has been smashed by the other costs they face in today’s market, such as the average increase in arrangement fees to £857, says Mform.co.uk.

People wanting to buy their first home are also up against increasing mortgage rates as lenders tighten their criteria and baton down the hatches as the credit crisis continues; first time buyers are having to scrape together a minimum deposit of five or sometimes 10 per cent, because all mortgage lenders have withdrawn the 100 per cent or more offers that were available last year.

If they can save up enough deposit – now averaging about £7,500 – they then face huge increases in mortgage repayments, up 16 per cent to £920 per year compared to March 2007. To get the best rates available, a deposit of 20 per cent is required.

Discount mortgages are also not helping as much as they were either, with the average discount available to first time buyers dropping from 2.12 per cent a year ago to 1.57.

“These are tough times for first time buyers.” said Francis Ghiloni, mform.co.uk’s marketing and business development director, “borrowers will need to be sure about their ability to meet these commitments before taking a step on to the property ladder.

“Potential borrowers need to be careful now more than ever to take into account the impact of fees on their mortgage in order to make sure that they have a clear idea of the true cost of their mortgage.”

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