18,500 FTB loans arranged in April

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by Lin Freestone

The latest figures from the Council of Mortgage Lenders indicate that first-time buyers are being squeezed out of the housing market.

In April 2008, 18,500 loans were arranged with first-time buyers. Although this is a 4% increase over the number of loans granted in March, it is 36% down on the same month last year.

It may be, however, that some buyers are waiting to see what happens in the marketplace, hoping for better deals if they bide their time.

The average deposit on the transactions was 13% of the purchase price, which is the highest figure since the beginning of 2005. It is now impossible to find a 100% mortgage, and 95% loans are very difficult to arrange.

Lenders who can find deposits of up to 40% are able to negotiate advantageous deals. Banks and building societies are much more eager to lend their diminishing stocks of money to low risk buyers with big deposits.

The market for existing homeowners also slowed in April. Compared with the same month last year, total mortgage deals fell by 38%, although there was a 13% improvement when compared with transactions in March 2008

A total of around 50,700 homebuyers took out new loans in April, which totalled £7.7bn. This was a 9% improvement on March, but much lower than the £12bn loaned to 80,000 borrowers in April 2007.

The increasing interest in fixed-rate mortgages led to 59% of the new buyers opting for this arrangement, 5% more than the fixed-rate deals taken up in March.