First-time buyers still wary of market

First-time buyers are unlikely to return to the market in any significant numbers despite yesterday's cut in interest rates, according to Convex.net.

The Bank of England's monetary policy committee (MPC) yesterday announced the base rate of interest would be cut by 0.25 per cent to five per cent.

This follows two quarter point cuts in December and February, which have seen the rate fall from 5.75 per cent.

However, these rate reductions are unlikely to be sufficient to ensure the speedy return of first-time buyers to the market, argues the conveyancing firm.

"Despite this cut, first time-buyers will still not be coming to the market in the current climate," said Duncan Samuel, managing director of Convex.net.

"The whole market is resting on first-time buyers and in the housing chains we are dealing with as conveyancers it is the bottom where the nerves are at their greatest."

The ongoing effects of the credit crunch are proving inhibitive to first-time buyers securing a footing on the property ladder.

"Where a cut like this might once have given an instant boost, that is less likely to happen now," continued Mr Samuel.

"The combination of lenders withdrawing high loan to value (LTV) mortgage products and a general feeling that the market has further to fall means first-time buyers are thin on the ground, and at the bottom of almost every chain you need a first-time buyer."

In response to the concerns Convex.net would like to see the government do more.

"More cuts would help the situation, but they need to come quickly. The government should be looking at other ways of helping the first-time buyer – particularly through initiatives such as Stamp Duty reductions," explained Mr Samuel.

This week the government announced first-time buyers were to be offered new grants in order to assist them onto the property ladder, but the scheme has been criticised for its lack of scope.