Mortgages for First Time Buyers. London Mortgage Advice Tuesday, 9th March 2010

According to property website Rightmove,
the number of first-time buyers who expect to enter the market in 2010 has declined, which is a worrying development.

In their Q1 2010 Consumer Confidence Survey, a quarterly survey which measures the public's property market views,Rightmove revealed that the number of projected first-time buyers for the year ahead has dropped for the third consecutive quarter.

A drop from 28% in Q4 2009 and 31% in Q3 2009, only 26% of those who expect to buy in the next 12 months will be first-time buyers.

London is the only region which has projected first-time buyer levels close to the typical, healthy market norm of 40%.The proportion of those who believe now is a good time to buy also fell for the fourth consecutive quarter to 58%.

"First-time buyers play a crucial role in keeping the market moving by helping to complete chains and their continued absence delays any prospect of a meaningful market recovery. Even more concerning is that this comes as part of an emerging trend showing the percentage of projected first-time buyers has been decreasing over the last three quarters." Miles Shipside, commercial director at Rightmove, said."Deposits are the greatest hurdle for first-time buyers to get over. In the aftermath of the banking crisis, lenders have increased the deposits required but by doing so have severely restricted the number of first-time buyers. This in turn affects total sales volumes as first-time buyers are typically responsible for around two in five of all property transactions."

This represents a new concern because now that prices have stabilised, these market conditions appear to be preventing first-time buyers from entering the market with mortgage lending now highly restrictive.