First Time Buyers Still Struggling To Get Cheap Loans
It is a well known fact amongst the housing and homeowner loan industries that first time buyers are an essential part of the property market.
If first time buyers are not encouraged to enter the market, this stops existing homeowners from being able to move up the housing ladder and everything grinds to a halt. Despite this fact, it would appear that a large number of banks and building societies are not attempting to attract first time buyers by offering competitive cheap loans at reasonable loan to value levels, choosing to focus on lower risk borrowers instead, according to new research from Moneyfacts.co.uk.
Although the cost of wholesale funding for homeowner loans has fallen significantly over the course of the past two years, it would appear that these savings have not been passed on to first time buyers, particularly those who may be looking for a loan to value of 90 per cent, with average rates reducing by just 0.12 per cent.
For those borrowers only requiring a 60 per cent loan to value, which excludes the vast majority of first time buyers, rates have fallen by an average of 1.86 per cent over the same period.
Michelle Slade of Moneyfacts.co.uk said “Sub two per cent rates are now being advertised by lenders, but we have no way of knowing how many borrowers actually qualify for these deals. Having been tempted through the door, many are likely to be offered much higher rates. First time buyers, once seemingly the lifeblood of the property market, are now apparently being ignored as lenders continue to cherry pick lower risk borrowers. It appears borrowers searching out a new deal are paying a higher price to subsidise existing customers, many of which are paying record low rates.”
