26 Feb

Mortgage situation 'worsening' for first-time buyers

Mortgage situation 'worsening' for first-time buyers

Taking the first steps up the property ladder is becoming increasingly difficult for British consumers, it has been suggested.

In a report by financial portal Fool.co.uk on the increasing trend for mortgage lenders to charge higher interest rates for borrowers who only have small deposits, first-time buyers are described as "the biggest losers".

This is because those starting out in the market usually do not have large deposits, the site suggested.

It added that it was "painfully ironic" that lenders are making it more difficult for first-time buyers to acquire finance at a time when property prices are finally becoming more affordable.

Commenting on the current market situation to the Guardian, Savills Private Finance's Melanie Bien said: "First-time buyers are going to find it a lot tougher and anyone who misses even one monthly payment is going to be flagged up as a risky borrower."

Following the publication of British Bankers' Association figures this week that showed record levels of remortgaging activity in January, Simon Rubinsohn, chief economist for the Royal Institution of Chartered Surveyors, also suggested there might be tough times ahead for first-time buyers.

He said that the figures show lenders are more willing to pass on base rate reductions to those already owning property, while first-time buyers are struggling to find finance.

"It does however throw into sharp relief the claim that a weaker housing market will necessarily be good news for first-time buyers," Mr Rubinsohn said.

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