Loans to first-time buyers fall

Mortgage lending to first-time buyers has dropped 48 per cent in July from last year as lending criteria tightens.

Banks and building societies now require higher deposits, making it harder for first-time buyers to get onto the property ladder, according to the Council of Mortgage Lenders (CML).

Buyers are also reluctant to make their first move in a falling market, the CML added, and are adopting a 'wait-and-see' attitude.

The CML said overall there were 47,400 house purchase loans worth £7.1 billion in July, unchanged from June.

This is a 51 per cent fall by volume and 54 per cent by value from the same month last year.

CML director general, Michael Coogan, said: "Tighter lending criteria have clearly made it more difficult for first-time buyers to enter the market.

"The stamp duty and shared equity measures announced by the government last week will be helpful to those first-time buyers looking to enter now, but many may be waiting for house prices to stabilise."

Tracker rate mortgages have increased in popularity as borrowers anticipate the next Bank rate move to be down; 28 per cent of borrowers took out tracker products compared to 21 per cent in June, the CML said.

For those with a large deposit, the finance situation is improving, however.

Of the twelve leading lenders, nine have cut their headline interest rates on two and three-year fixed-rate deals in the last two weeks alone, according to research from MoneySupermarket.com.