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First-time buyers unable to get a mortgage

Saturday, 13 June 2009 12:50 AM

The number of 90 per cent loan-to-value (LTV) mortgages has fallen by 97 per cent.

According to research from moneysupermarket.com, since January 2007 there have been huge falls in the mortgage availability for first-time buyers (FTBs).

The figures show just 102 mortgage products are currently available at 90 per cent LTV, compared with 3,148 two and a half years ago.

Louise Cuming, head of mortgages at moneysupermarket.com, said: "The government has failed to get mortgage lenders to open their books to first-time buyers.

"A ten per cent deposit is all most first-time buyers can hope to afford, so by pulling 90 per cent LTV deals off the shelf, and increasing rates on the remaining deals, providers are keeping first-time buyers out of the market - which simply exacerbates market stagnation."

Moneysupermarket's research also discovered the rates on 90 per cent mortgage deals had actually increased over the same period, despite the base rate falling to historic lows of 0.5 per cent. In January 2007, the average 90 per cent LTV mortgage was 1.2 per cent above the base rate, with the average difference now being 5.73 per cent.

Ms Cuming added: "Lenders remain for the most part entirely focused on how large a deposit potential borrowers can provide.

"However, if they were to take a more balanced view and place as much importance on affordability and credit profile, they could offer competitive deals with a higher LTV to those who clearly demonstrate they can and will make the required repayments."

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