First-time buyers stay away after rate rise

Posted: 09 Feb 2007 10:31:15 GMT

The number of first-time buyer mortgage applications has fallen over the course of January after hitting an eight-month peak at the end of 2006, Mortgage Direct has said

The number of first-time buyer mortgage applications has fallen over the course of January after hitting an eight-month peak at the end of 2006, Mortgage Direct has said.

The proportion of mortgages taken out by first-time buyers compared to homeowners fell ten per cent to 38 per cent of the market, the broker said.

The dramatic fall in such a short time may be due to January's surprise interest rate rise, which "knocked the confidence of the group" said Peter Gladdy of Mortgages Direct.

"As expected, the last interest rate rise has not been good news for first-time buyers who are still having difficulty getting onto the property ladder."

The loan-to-value ratio of mortgage applications during January also fell to a 12 month low as homeowners reined in borrowing ahead of possible further rate rises.

The most popular deals were two-year fixed rates said Mortgages Direct, which offer some insurance against additional borrowing costs

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