Lack of mortgages sees first-time buyers fall at final hurdle

16 February 2009 / by Rachel Mason
First time buyers are ready to get on the property ladder but lenders' reluctance to make mortgages available means they are left frustrated at the final hurdle.

The National Association of Estate Agents (NAEA) says although the demand for property is there, first time buyers are struggling to purchase homes because the mortgage deals are just not there.

Yesterday, the latest Council of Mortgage Lenders (CML) data revealed that mortgage lending was 49 per cent lower in 2008 than in 2007 – the lowest level in 35 years.

According to the research, mortgage activity in 2008 was at its lowest level since 1974, with 516,000 fewer house purchase mortgages approved than in 2007.

"NAEA figures show that there is a huge demand for property from first time buyers, who are increasingly visiting estate agents, registering their interest and searching for property." explained Peter Bolton King, Chief Executive of the NAEA.

"These figures demonstrate that they are being frustrated at the final hurdle because lenders are not making mortgages available."

Mr Bolton King says that lenders need to start loosening up because first time buyers are vital to the UK economy; "first time buyers are crucial," he said, "not only to the housing market, but the entire economy. More must be done to help them."

While Liberal Democrat Shadow Housing Minister, Sarah Teather is concerned about the effect the lack of lending is having on unemployment figures.

"With mortgages drying up for all but those with the largest deposits, it seems that the dream of owning a home of their own is as far away as ever for would-be first time buyers," she said.

"And with the housing market in the doldrums and no-one building new houses, many more construction workers may lose their jobs.

"Ministers must use this opportunity to buy cheap land and replenish the social housing stock, which would safeguard these vital jobs," she said.

CML director Michael Coogan says the CML is aware that the market is not currently functioning properly and that action is being taken.

"This low level of transactions is insufficient for the functioning of an efficient market," he said. "Measures are now in place to seek to restore the flow of funding to the mortgage market, but this will take time to feed through.

Mr Coogan continued, "further action may still be necessary to increase transactions, stabilise prices and restore confidence."

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