First-time buyers facing uphill struggle


September 6, 2012

Bob Hunt is chief executive of Paradigm Mortgage Services


Anecdotal evidence over the past few months seems to suggest that product availability at higher loan to value amounts is on the rise, but this has been exposed as not the case according to the latest research from Moneysupermarket.


Its findings reveal that the number of 90% and 95% LTV mortgages has fallen by 26% and 43% respectively over the last year.


This means the actual number of products now stands at 244 for 90% deals and just 28 for those with a 5% deposit.


This reduction in availability obviously hits first-time buyers hard and the comparison site also found that products specifically aimed at such borrowers also fell by 31% to 1,225 over the same period.


The Government has made no secret that one of the main intended benefactors of its Funding for Lending scheme should be first-time buyers, but while it may be too early to fully assess the impact the initiative is having, there doesn’t appear to be a rush to unveil high LTV offerings.


Indeed, if the early signs are any indication, it appears the subsidised tranches of funding are being diverted most towards longer-term deals for borrowers with substantial deposits. With savings rates marooned at unfavourable levels and the cost of living edging ever upwards, first-time buyers can be forgiven for feeling stuck in an uphill struggle.


Mortgage brokers can also be forgiven for a feeling of helplessness given this current predicament.


While they should recently have seen increases in remortgage and buy-to-let business, first-time buyer activity is not where we would wish it to be.


However, one positive way of looking at it this issue is the undeniable fact that intermediary’s services have never been more required.


Although there may be fewer products than we would wish for first-timers – seemingly making the mortgage minefield more navigable – it also means that borrowers are having to search harder to find a suitable deal and in this sense one would suspect (and hope) that the services of a mortgage broker should be in even more demand.


Given that advisers know the ins and outs of each product and what is required to get deals over the line with each particular lender, they can be worth their weight in gold to first-time buyers struggling to make sense of their often limited options.


They can also advise borrowers on issues such as cleaning up their credit reports and ensuring they present their application in the correct way, something individuals may overlook if they are applying for a mortgage direct.


Brokers can act as an impartial sounding board for concerned first-time buyers and walk them through the process independently, unlike banks that can only offer them their own product suite and will encourage them to use their own associated providers.


Borrowers can rest assured that brokers will find them the most suitable deal for their unique circumstances and not try and shoehorn them into a generic home loan offered by the banks.   


Dwindling product availability can feel like the latest in a long line of bad news stories for mortgage brokers, but truly savvy operators will turn the situation to their advantage by highlighting how they can help those borrowers who may have far more options than they realise. 


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