For over a decade now many first time buyers have been waiting patiently to try and get onto the property ladder, but with house prices soaring year on year many have simply been priced out of the market, and have been resigned to renting a property and throwing away good money after bad on a property that they will never own. However, over the past six or seven months first time buyers may have seen a glimmer of hope, as house prices have been falling month on month and the housing bubble appears to have burse at last. But are first time buyers actually any closer to getting onto the property ladder?
For many the answer to this is no. Whilst the prospect of falling house prices is good news for those still waiting to take their first steps onto the property ladder, there are many other obstacles that are now in their way, and most of these relate to the mortgage market. The mortgage market has been thrown into turmoil over recent months, and this has all stemmed from the onset of the global credit crunch, which made its way across from the United States last summer.
Lenders have made some serious changes to their lending strategies since the onset of the global credit crunch, and one of the groups that has been most affected by these changes is first time buyers, who have been dealt another blow just as they thought that getting onto the property ladder was going to get a little easier. Whilst the base rate has come down three times since December of last year many lenders are still charging very high rates of interest on their mortgage products, and this is just one of the factors that is affecting first time buyers.
The number and range of mortgage products on the market has also been reduced over recent months, and one of the ways in which first time buyers have been hit by this is through the disappearance of 100 mortgages, which were once very popular with first time buyers. This is because most first time buyers have little in the way of savings and therefore may struggle to find a deposit to put down.
And on the subject of deposits this is another area that has affected first time buyers. Many lenders have now increased the deposit that they require from borrowers for their more affordable mortgage deals, and the traditional 5 deposit seems to be disappearing, with some lenders asking for as much as 25 or more. With no previous property from which to take equity this is something that many first time buyers are struggling to raise, and effectively this is keeping many off the property ladder.
Gone are the days of easy access to 100 mortgages. Larger deposits are now required as lenders are now increasingly trying to protect themselves from bad credit. This has resulted in a double edged sword due to the fact that first time buyers are finding it hard to get on the property ladder however first time buyers are the lifeblood of the property market and without them the credit crunch will continue.
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