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Ash4781

First-time Buyers Foiled As Mortgages Disappear

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http://www.guardian.co.uk/money/2009/sep/2...uyers-mortgages

The problems faced by first-time buyers were highlighted today as research showed a 75% fall in the number of loans available over the past year to those with just 10% to put down as a deposit.

The figures from financial firm Moneyfacts show a gulf between the number and cost of loans available to those with large deposits and those unable to raise more than 10%, as lenders continue to cherry pick the least risky customers.

Over the past two years, 90% loan-to-value (LTV) mortgages have all but disappeared – just 101 deals are available, of which first-time buyers are eligible to apply for 87. This time last year first-time buyers had a choice of 349 mortgages, while in September 2007 they could access 674 deals.

Meanwhile, the number of mortgages specifically being offered to those with a 40% deposit has increased sharply from 17 to 320. First-time buyers are eligible to apply for 218 of these, but with the average UK house price at £155,885, according to Land Registry figures, that would mean raising a deposit of £62,354.

Analysis by Moneyfacts of the average cost of a two-year fixed-rate deal shows that first-time buyers unable to raise that kind of deposit have not benefited from falling interest rates. Rising margins mean the average rate on a 90% mortgage has dropped by just 0.12% over the past two years to 6.12%, even though swap rates have fallen from 6.22% to 1.87%.

Although margins have also increased on lower LTV loans, buyers with bigger deposits can find more competitive loans than two years ago. At 75% LTV, two-year fixed-rates are at an average of 4.66% compared with 6.4% two years ago, while those borrowing 60% are typically offered a rate of 4.49% compared with 6.35% in 2007.

Recent weeks have seen a flurry of price cuts and the launch of a deal with a rate of less than 2%, but mortgage brokers said times were still hard for first-time buyers. Andrew Montlake of the Coreco Group said: "The difference is not just in the rates but in the underwriting – it is a lot harder to get a loan at 90% than at 75%. You have to go through a lot of hoops for a 90% mortgage."

Montlake said would-be buyers were either taking longer to save or turning to their parents for help. Ray Boulger of broker John Charcol said a lack of funding and the expense of offering high LTV mortgages meant lenders were being fussy.

"Because there is not enough supply in the mortgage market lenders are cherry picking, and the business that is least profitable for them is the higher LTV lending."

Boulger added there were "a very small number" of 90% loans that offered good value, including HSBC's two-year discount deal with a rate of 3.89%.

Sorry if already posted. This is the reality I'm finding as a FTB in the South East.

For FTB's improving affordability will need to come from falling prices. (edited)

QE's really working for the FTB's ;)

Edited by Ash4781

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Houses really need to be taught a lesson.

Refusing to realise that the credit binge is over & that all they consist of is bits of brick, wood, polystyrene, pvc, zzzzzzzz

is going to hit them right in the boulgers one day

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Muuuuwwaahhhaaa haaa...Moriarty the banker has yet again foiled the plans of the FTB with his mortgage trickery....

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Don't worry the jobless recovery is here, everyone will have enough time to save to buy a house.

Quite.

Besides, I've always said it will be the banks pulling up the drawbridge, not massive job losses that will be the final nail in the HPI coffin. There's not nearly enough credit worthy new entrants to the market to stabalise it. Recovery or no recovery, the banks won't be taking on higher risk customers anytime soon.

People will soon cotton on to the fact their house is only worth what someone will (or can) pay for it.

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http://www.guardian.co.uk/money/2009/sep/2...uyers-mortgages

Sorry if already posted. This is the reality I'm finding as a FTB in the South East.

For FTB's improving affordability will need to come from falling prices. (edited)

QE's really working for the FTB's ;)

Nothing has improved for FTBs, it has got worse.

My sister got a 95% LTV mortgage fixed at 5.5% for 10 yrs in 2007

The Guardian at the weekend said the best FTB 5-yr fixed is currentlly 6.49% and max 90% LTV

Thanks to the 'recovery' in house prices, in her area of Bristol prices are at least back to 2007 peak prices so it's now more expensive to buy than at the peak!!!!!

FTBs represent the new money coming into the market, that's necessary for a 'normal' market with normal sales volumes. They bring the big new money to the bottom of the chain that feeds all the way up. Currently the housing market is suported by low volumes and cash/equity rich buyers - they can't support a market working at normal volumes.

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but but...

You don't need first time buyers to maintain the property market...(apparently) :lol:

According to Peter Bolton-King, chief executive of the National Association of Estate Agents, a healthy property market requires between 25% and 33% first-time buyers.

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For FTB's improving affordability will need to come from falling prices. (edited)

and this is the cold hearted truth that people need to come to terms with.

not stupid shared ownership or government scheme to help people buy at these prices.

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The banks are in fact doing everyone a favour. Insane bank lending is what allowed prices to rise and will ultimately facillitate the fall in prices. Not every seller can hold out for a cash rich buyer and in time many more will have to sell for all sorts of reasons regardless of holding their breath for a high price.

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The banks are in fact doing everyone a favour. Insane bank lending is what allowed prices to rise and will ultimately facillitate the fall in prices. Not every seller can hold out for a cash rich buyer and in time many more will have to sell for all sorts of reasons regardless of holding their breath for a high price.

Exactly! If you a prepared to be patient this is great news for FTBs. Support for house prices has come from cash-rich buyers ie those lucky enough to happen to have 50+ grand in the bank or generous mummies and daddies. Although their numbers are small, it is still enough to impact on the low volumes we are seeing at the moment = HPI.

HOWEVER, whilst this has been going on, it seems the banks have been pulling the rug from under the housing market by withdrawing high LTV loans. So what happens when these cash-rich buyers either 1) Run out 2) Loose motivation (ie when prices plateu again or are scared off)? HPC is back on - big time, as there isn't even the safety blanket of a half decent number of FTBs left (as they don't have access to funds). Remember, house prices fell over 20% in 18 months purely because of a lack of finance and this time we also have a lot greater unemployment, more expensive mortgages and possible interest rate rise on top of that.

Of course when the banks genuinely believe that HPI is back then they will start dishing out mortgages to FTBs again, so as I said good things will come to those who wait!!

Edited by NEO72

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Number of deals isnt' really definitive though.

50 available deals with 1bn of financing are the same as 1 deal with 50bn of financing.

That's a gross simplification, but most banks have cut the variety of mortgages they offer.

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Aye, I'm a would be FTB, and those that I know who have bought a house have done so with help from the bank of mummy and daddy. The ones who didn't can just about afford their mortgage now, and will be predictably shafted when interest rates rise in the future. One of those couldn't even rent out her property for the amount she's currently paying on the mortgage! Good move eh?

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The rates being offered by the banks are poor compared to those available in the recent past for FTBs, but can you blame the banks? Lending to FTBs with small deposits is a mugs game at the moment. Everyone knows prices are going to fall. The jury is out on the quantum of falls. It is (uncharacteristically) prudent of the banks to factor in this risk premium into their lending rates.

The banks' unwillingness to lend will bring down the prices of houses. We all know it, they know it, only Nulabour and the fools buying at current market prices can't see this.

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