First Time Buyer Loans More Affordable
For a couple of years now, it has been difficult for practically anyone to get the loan they needed, due to the effects of the credit crunch and banking crisis. It has been particularly difficult for would be first time buyers to be accepted for a suitable loan to get themselves onto the housing market ladder.
Although everyone acknowledges the fact that first time buyers are the lifeblood of the housing and home owner loan markets, the majority of banks and building societies regard them as a high risk area of lending, as many of them do not have any previous track record of being able to maintain their loan repayments.
However, the cost of an average first time buyer loan has started to come down, according to new research from Moneyfacts.co.uk. This news, coupled with the fact that there are now a growing number of first time buyer loan products which allow up to 90 per cent loan to value, has started to make buying a house a realistic and almost affordable option for many first time buyers.
As a result of this, the number of new loans approved for first time buyers increased by around 20 per cent in June, according to the latest figures from the Council of Mortgage Lenders (CML).
The average interest rate for a first time buyer loan at 90 per cent loan to value has fallen from 6.48 per cent six months ago, to just 6.15 per cent today.
However, a large deposit is still clearly the key to the best loan deals. Those first time buyers who are able to raise a deposit of 25 per cent will be able to obtain a loan rate of around 4.11 per cent, more than 2 per cent cheaper than a 90 per cent loan deal, which equates to around £170 per month less in interest payments on a loan of £100,000.
