First Time Buyers are Struggling to Find Mortgages

Author: Danielle Fletcher
You may be forgiven for thinking that in today’s current economic situation finding a mortgage if you are a first time buyer is near on impossible. You would be right to a certain extent, in that mortgages for first time buyers are definitely harder to come by, but they are not completely extinct. The housing market relies on first time buyers to keep it buoyant and enable people to move to the next rung of the ladder.

If there is a huge drop in the number of first time buyers, as we are currently experiencing, the market becomes stagnant and prices are forced to drop. For lenders this is not good news. Banks and other financial intuitions which have lent money to people so they can buy property want that investment to stay sound. If house prices are going up then profits are going to be made, which reduces the risk to the lender it case of the borrower not being able to meet the monthly payments. So mortgage lenders are still offering products to help people onto the market, but admittedly the criteria to get one is now a lot more stringent.

Banks are now requiring large deposits from first time buyers and evidence of a good credit history. Typically these two things can be difficult for first time buyers to produce. Firstly first time buyers are struggling to save with the increasing costs of living and secondly if they have been previously living with their parents or family, they may not amassed a sufficient credit rating themselves. Both of those facts may hinder their ability to find a good mortgage deal. Typically first time buyers would have turned to the high street to find their mortgage deals. The big banks would often be advertising their rates in their windows aiming at enticing people in. Nowadays the advertisements seem to be more aimed at those who want to save money as opposed to those who want to spend it.

The difficulty now is how do first time buyers find a mortgage lender that is prepared to offer them a deal. One way is through a mortgage lead company. Mortgage lead companies provide details of interested consumers for a range of financial products to financial institutions. Sometimes these financial institutions are smaller providers that are offering good deals but because of their size they do have the huge advertising budgets of the bigger banks and therefore struggle to let people know about what they are offering. By setting up websites where first time buyers can express an interest in certain products, mortgage lead companies can link up the borrowers with the lenders hopefully with some success. This process can work well in matching first time buyers with people that are willing to lend them money which in turn will get them into the housing market. This may then help the chains that depend on first time buyers to move the market forward and hopefully reverse the fortunes of the current property ladder.
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