London (Ask4loan) 02 February, 2008: First-time home buyers are increasingly finding it difficult to get a foothold on the property ladder.
According to the Royal Institution of Chartered Surveyors (RICS), lenders have reduced the amount they are ready to lend to the first time buyers, leaving them in a difficult situation. High initial deposits required by the lenders means that millions of first time buyers could be priced out of the housing market.
David Stubbs, a senior Economist at RICS, said: "First-time buyers are finding it even harder to get a foothold on the housing ladder and the signs are that conditions are unlikely to get better in the short term. Mortgage lenders are demanding ever higher deposits as the credit crunch continues to take effect."
The housing market in the UK is slowing down sharply amid the credit crunch. The interest rates have increased and low consumer confidence is taking its toll. However, in the last quarter of 2007, the existing homeowners found it relatively easier to repay their mortgages - the first such improvement since early 2006. According to RICS, mortgage affordability hit a 16-year low in the third quarter of 2007.
The Bank of England is expected to reduce its base rate next week. There are strong indications that it is going to take away 25 basis points off the current level of 5.50%. The home owners are likely to get a little relief on their mortgage and secured loans repayments, if they are on tracker mortgages and loans that are based on the base rate as revised by the Bank of England from time to time.