In September 2008, it was reported that in July, 47,400 house purchase loans worth £7.1 billion were approved. This might seem like a lot, but when you consider that this was actually a 51% fall in volume and 54% decline in value on July 2007, then you start to realise just how bad the housing market is at the moment.
First time buyer mortgages also declined to 17,300, down 5% on June and 48% on July 2007.
If first time buyers can't even get a mortgage, then how will the property market survive? Many property developers are in the business that they are because they know they can renovate a house and price it at an amount that will instantly appeal to first time buyers.
I think it is awful that first time buyer mortgages are becoming less readily available. I would be interested to know just how many of us would be able to get a 100% mortgage these days. Many mortgage lenders simply fear that the money will not be able to be paid back.
Gill Montia from Financemarkets.co.uk reported that the average first-time buyer deposit rose from 13% in June, to 15% in July. As a result, the average loan-to-value ratio for a first-time buyer fell to 3.24 times income, down from 3.33 times income in June and reverting to the level recorded in July 2006.
I have to wonder just how much longer this situation can continue. Many first time buyers are being suitably "put off" by all the financial problems we are seeing in the news. With banks going bust and lenders holding onto their money tighter than ever, first time buyer mortgages are going to be hard to come by.
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