First Time Buyer Mortgages Rise despite Tougher Restrictions

Rise In First Time Buyer Mortgages

According to Mortgage Introducer, the number of people obtaining first time buyer mortgages is at the highest it’s been since 2007. However, the number of people who obtained a first time mortgage in 2012 was still 50% lower than it was in 2006, and there are worries that due to tougher restrictions on first time buyer mortgage agreements, this recent high may not last.

The Privileged Few

Hilary Osborne for the Guardian reported in December that, although 20,000 loans for first time buyer mortgages had been advanced in October, these loans were what experts are referring to as ‘the transactions of a privileged few’. Low housing prices haven’t helped the majority of potential homeowners who cannot raise the necessary deposit for first time buyer mortgages. Additionally, first time buyers are voicing their concerns about the future economic climate and more than 25% of people with existing home loans worry about repossession.

Nationwide Save to Buy Scheme For The First Time Buyer

In response to the first time buyer mortgages deposit crisis, Nationwide Building Society has unveiled a new mortgage scheme called ‘Save to Buy’, which gives consumers access to a special 5% Save to Buy Mortgage as long as they are able to deposit at least £50 a month in a special savings account. However there is no guarantee that at the end of the stipulated 6 month period you will qualify for a Save to Buy Mortgage, even if you have made the requisite payments, and Nationwide’s Save to Buy Mortgage is not necessarily representative of the best deal on the market for people looking for first time buyer mortgages.

Funding For Lending

first time buyerThe Bank of England’s Funding for Lending scheme was launched in August 2012 to try to grow lending opportunities for households and businesses. However, so far the scheme has not had much of an impact upon credit supply and the Bank of England has admitted it is too early to assess the value of its FLS programme, despite widespread falls in financing and funding costs across a variety of sources.

The FLS scheme has so far not been as successful as was predicted, and has reportedly leeched up to £1bn out of the economy by bailing out two banks – the Royal Bank of Scotland and Lloyds Banking Group. And the average lending rate being offered to customers has actually fallen since the scheme’s introduction, from 2.82% to 2.42%, as lenders are now finding themselves less reliant on the need to attract deposits from savers.

The Future for First Time Buyer Mortgages

So whilst both the lending terms of first time buyer mortgages and housing prices themselves look set to continue falling in 2013, lending terms may not budge much more than they already have done, unless it is to tighten. However lending is itself set to rise, with various lending schemes, both private and government backed, giving new confidence to people interested in obtaining first time buyer mortgages. Click here for further advice from themortgagebroker.co.uk, specialist provider of first time buyer mortgages and mortgage advice.

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