First time buyers are fighting back says Fair Investment

01 November 2007 / by None
First time buyers have not been put off by the recent dip in the property market and are still hoping to cinch a good mortgage deal, according to research from

Following news this week that Britain’s first time buyers may soon be a thing of the past, it seems that those wanting to get onto the property ladder are more determined than ever to realise their dreams of owning their own place and are not letting the fall out from the US sub prime mortgage debacle stop them.

Analysis from, the financial news portal and comparison website, has shown that even though overall mortgage enquiry figures for the past three months were down compared to the first three months of the year, the number of first time buyer inquiries has increased significantly, from an average of 56% in January, February and March up to 74% for August, September and October.

Fair Investment’s data also shows that although figures for those wanting 100% mortgages has remained fairly constant, the percentage of 100% mortgage inquires made by first time buyers has increased significantly – from 77% in the first quarter to 92% in the past three months.

James Caldwell, Director of explains: “Britain’s love affair with the property market is far from over, despite the recent dip and the gloomy forecasts for the next few years. Our figures suggest that while overall there have been fewer mortgage enquires since the first quarter of 2007, first time buyers are still keen to seek out a deal and are fully prepared to opt for 100% mortgages if it means getting their own home.”

A similar trend has been reported by a number of lenders such as The Co-operative Bank who has seen a 30 percent rise in 100 percent mortgages as a proportion of its first-time buyer lending since the start of this year while Alliance and Leicester has found a willing market for its new mortgage launched in April which offers loan-to-values of up to 125 percent.

Undoubtedly, increased competition has helped reduce the interest rates on these types of mortgage loans, but the concern is that there will eventually be a premium to pay and this is likely to move higher following the credit squeeze. Already, a number of smaller lenders have taken steps to withdraw products over the last month while rates for others have started creep up, making those with 100% mortgages vulnerable to price falls as there is no equity to lessen the impact.

Mr Caldwell continues: “The demand for 100% mortgages has shot up over the past year. With interest rates having risen five times since August 2006 to keep down inflation, slowing the market as a result, buyers are naturally being stretched to their limits. While 100% mortgages may sound like the answer, even just a 5% deposit could provide the homeowner with some peace of mind under the current climate.

“Our advice would be to compare the market and see what you can realistically afford to borrow. There are still some good deals to be had with many of the major lenders and now is a good time to be shrewd by exploring all the possible choices.”

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