Mortgage availability to be limited to established homeowners, expert says

As the housing market continues to stagnate, first-time buyers will be forced to sit on the sidelines as mortgages are favoured towards established homeowners with significant equity, says Matt Griffith.

The spokesman for PricedOut, a national campaign lobbies the government for reasonably priced hosuing, suggests that buyers without a competitive amount of equity will have difficulty finding available mortgage finance.

He explains that the UK housing market will continue to be very dysfunctional, regardless of whether there is an increase or decrease in the number of first-time buyers entering the market. Adjustment costs are influencing the market by freezing homeownership and putting undue stress on renters.

"These other housing pressures, on rents and on income, are probably the bigger story at the moment than the continued death of the first-time buyer," Mr Griffith laments.

Evidence from Rightmove does suggest that there will be an increase in homebuyers purchasing their first home, with 24.3 per cent of all houses sold on the market set to go to first-time buyers. Yet, this is only a meagre increase of 1.5 percentage points on last year's statistics.

In the same report, Rightmove did find that the biggest concern for first-time buyers is finding an appropriate property rather than acquiring a mortgage. Just under a third cited this apprehension, which is a six per cent increase on the last quarter.

The end of the Stamp Duty holiday for first-time buyers on March 24th should, however, cause a surge in people entering the property market. That is, if they can find the right property for them.

Haart has cited the end of the holiday as a reason for the spike in registrations from first-time buyers since Christmas. The estate agent has had 5,000 potential first-time homeowners register per week since Christmas.

The Treasury may be spurring the nation on to get on to the property ladder. But will the end of the Stamp Duty holiday result in a dearth of first-time buyer mortgages  for the rest of the year?

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2012-02-10 12:46:21 © Moneyextra.com