Number of first-time buyers dwindling

Permalink: Number of first-time buyers dwindling
by Kay Murchie

The most recent issue of the moneysupermarket.com ‘Mortgage Map’ has established that first-time buyers are dwindling at a particularly fast rate. Since March, the percentage of people ranked as a “first-time buyer” has declined by one fifth, indicating that increasing interest rates and rising property prices are having a major effect.

In addition, the dominance of landlords and increasing immigration may also be a reason for the deterioration in first-time buyers.

The research also discovered that a flood of lenders increasing their rates means that homeowners are increasingly opting for fixed rate deals of between one and five years so they are more likely to be able to make the monthly repayments.

A spokesperson for moneysupermarket.com commented that it seems the attrition of first-time buyers as they either move out of owner occupation or onto second time purchases is happening at a much quicker rate than new first time buyers coming into the market.

The spokesperson added that first-time buyers are the core of the property market and provide essential liquidity so there are fears for the economy overall as the proportion is deteriorating.

Moneysupermarket concluded that it’s not surprising that many potential first-time buyers are becoming wary and opting not to purchase a home. Recent figures from the Council of Mortgage Lenders are showing a similar picture, albeit only measuring homeowners, with the percentage of first-time buyers dropping 6% against the total borrowing population for the first 6 months of 2007 in comparison to 12 months ago.