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First Time Buyer Enquiries DropThe volume of mortgage enquiries from first time buyers has dipped below the volume of enquiries for remortgages according to a leading mortgage leads supplier. The trend started in October last year and has continued into the new year and is likely being felt due to the credit crunch. One of the reasons is the tightening of lending criteria from mortgage lenders is a barrier to new entrants to the housing market. One of the issues for the housing market is that when first time buyer enquiries drop off the whole chain is effected thus depressing housing prices further. One silver lining is the recent base rate reductions and the increasing likelihood of further rate reductions in the coming months.
Those first time buyers that do take the plunge are borrowing 9% more of a properties value than 2nd time buyer or remortgagers on average. It's also become apparent with recent market research that first time buyers are having to borrow 3.5 time household income compared to 3.11 for other borrowers. The higher the income multiples the higher the risk to lenders and the more costly a mortgage is likely to be. Lenders wanting to reduce their risk are pulling the high LTV products od old and there are only 6 100% mortgages available now compared to over 30 just a few months ago.
29 February 08
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