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Comparison site: Lenders push first-time buyers out of market

11-Jun-2008

Mortgage lenders are pushing first-time buyers out of the market because of restrictive deposit demands, it has been claimed.

According to financial analysts at Moneyextra.com, current deposits required can amount to tens of thousands of pounds, and this - rather than the Bank of England's base rate - is "crushing the life" out of the mortgage market.

The website's latest monthly review indicates that the average loan-to-value (LTV) being considered by first-time buyers last month was just under 82 per cent.

However, many lenders routinely restrict borrowers to loans of no more than 75 per cent of a property's value, while some offer their "best" rates on 60 per cent LTVs.

"Mortgage interest rates, in general, are cheaper now than they have been for more than a year," remarked Robin Amlôt, senior editor of Moneyextra.com.

"But it's all but impossible for many potential buyers to find a lender because of the size of deposit they're being asked to provide," the editor continued.

Moneyextra.com's figures suggest that the average property sought by first-time buyers via its comparison service in May was £170,236, meaning a mortgage offering no more than 75 per cent LTV would require a borrower to find a deposit of £42,559 - something many would find difficult without considerable help from family or friends.

FirstRungNow.com - how to buy a house, from finding your first flat or first house, first time buyer mortgages, shared ownership, buying with friends, gifted deposit, part buy part rent - all a first time buyer could possibly need.

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Interest rates are low but could rise? Is this a good time to buy?

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Shared equity mortgages allow you to buy a new home with 5% deposit and an equity loan through FirstBuy. What do you think?

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Rent to buy allows you to peg a property price, save towards a deposit and pay reduced rent. What do you think?

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