Since 2008, first time buyers have had it tough. With lenders afraid of borrowers who were defaulting and properties falling into negative equity, the reins have been significantly tightened.
Demanding deposits to the value of at least 15 percent if not more, lenders then subjected potential buyers to rigorous credit scoring that were tough for even those with the cleanest of credit scores.
However, it seems the last week may have brought some light to first time buyers. A steadily rising number of 90 percent mortgages are being marketed, bringing the possibility of buying with just a 10 percent deposit back to the broader marketing.
According to Moneyfacts, around 214 mortgages are currently available at a 90 percent loan to value ratio. Prior to the credit crisis, there were approximately 900 mortgages that met these criteria. Last year, there were fewer than 100.
Home loan providers offering these include Northern Rock, Newcastle Building Society and Santander.
Other lenders are also seeking to offer alternatives to encourage the first time buyer back into the marketplace. For instance, Lloyds TSB has introduced a ‘Lend A Hand’ offer that allows the borrower’s parents to use their own savings to back the purchase.
Another type of deal sees lenders form partnerships with new-build property developers, such as that between Barratt and Hitachi Capital, which allows parents to borrow up to £50k to cover their offspring’s Barratt home deposit.
All these deals help the first time buyer to find ways to cover their deposit, but of course affordability of the monthly mortgage repayments is the key issue and to date, according to the Nationwide Building Society, the number of first time buyer purchases remains low. Those looking to study for the CeMAP, at home or in a full time course, will qualify as a mortgage advisor at the start of a new era in the mortgage market.
So, will the increasing number of 90 percent loan to value mortgage offers see the first time buyer market back in business?