FTAdviser.com

Advertising

Almost eight out of 10 mortgage advisers have noticed a decrease in business from first-time buyers in the last three years and many expect this decline to continue for the next three years.

This was one of the many findings of Mortgage Adviser's last reader survey, which polled 217 mortgage professionals online during September to ascertain their thoughts on first-time buyers and asked them what it would take to bring fresh blood back to the market.

Seven out of 10 intermediaries felt it was difficult for first-time buyers to get a loan in the current climate but eight out of 10 mortgage advisers felt it was about time first-time buyers had to save a greater deposit before attempting to get on the ladder.

The main thing on a first-time buyer's mind when they were consider getting a mortgage was the loan-to-value, according to eight out of 10 advisers, closely followed by the initial interest rates, according to nearly three-quarters of those polled.

However according to some intermediaries, it is important that first-time buyers look beyond the first couple of years and consider the long-term effects of their decisions, for example considering the possibility they may not be able to remortgage with the same lender.

Would they be able to afford to be on the standard variable rate at the end of the fixed term?

The most important thing first-time buyers should be looking at when deciding on a mortgage, according to 71 per cent of advisers, is the loan-to-value available.

They should be looking at getting the lowest loan-to-value possible, which in turn means saving for the largest deposit they can.

However David Finlay, intermediary business director of Barclays, said while the first-time buyer market at the moment was very difficult in terms of house prices, affordability and the size of deposit, first-time buyers need to have lenders know they need to help people buy their first home.

He said: "As the market moves forward, it will come back. I am sure there are lenders like ourselves looking at creative options in order to try and help first-time buyers at the moment.

"The market conditions are such that the thing we need to do is keep trying to get back to a position where first-time buyers can re-enter the market and enter into it with a certain degree of confidence."

When Mortgage Adviser asked readers what it would take to rejuvenate first-time buyers nearly 60 per cent said there are nowhere near enough high loan-to-value or near prime deals currently on offer.

Half of the advisers polled also believed it would be somewhat effective to increase the income multiples on offer to these borrowers.

But a return to the products of a year ago is unlikely to happen any time soon, according to Mr Finlay.

He said: "It will be a while before lenders will move back to the higher loan-to-value and it will take quite a substantial move an event I cannot conceive at the moment."

But Barclays' Mr Finlay said confidence would come back when house prices started to stabilise.

He said: "It will probably take another year, then you will see first-time buyers who will have had a period of time to save some deposit, re-enter the market."

But in the end, a more educated and sensible attitude towards saving and affordability will be the salvation of the first-time buyer market.

Seven out of 10 of the intermediaries surveyed do not believe there will be a substantial return of first-time buyers to the market until at least the second half of 2009 and this will require borrowers to have saved enough deposit, house prices to be at their lowest, more positive press and better deals on the market from lenders.