Interest rate cut another blow for first time buyers
06 February 2009 / by Rebecca Sargent
According to the NAEA, more interest rate cuts just serve to reaffirm the fact that the only people willing to help first time buyers into the market are parents. Peter Bolton King, chief executive of the NAEA said:
“The reality for most first time buyers in Britain today is that the only bank that will help with a deposit is the Bank of Mum and Dad. The NAEA knows that there is a huge demand for property out there and that potential first time buyers are exploring the market in larger numbers than we have seen for months.
“However, that will not translate into sales and bring the confidence needed to get the market moving again, when the only people willing to give a foot up onto the housing ladder are parents.”
Since the Bank of England made the announcement yesterday that interest rates now stand at one per cent, several mortgage lenders have revealed that they will be passing on the full cut to SVR and tracker mortgage customers.
However, cutting rates for these customers means the mortgage finance is not there for other borrowers, including first time buyers and those looking to remortgage. Head of mortgages at moneysupermarket.com, Louise Cuming said:
“It will hit those looking for new deals very hard. Lenders will have to replenish their coffers from somewhere.”
According to Moneyextra.com, lenders are withdrawing mortgage products rather than cutting interest rates; its research shows that the number of mortgage products available has now fallen by 86 per cent in the last 12 months.
Managing director at Moneyextra.com, Richard Mason added: “This leaves first time buyers, buy to let investors and anyone without a big deposit struggling to buy a property – of the 1,634 mortgages currently available from prime lenders, almost 90 per cent require a deposit of 20 per cent or more.”
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