We are all more than aware of the slow down in the housing and homeowner loan markets over the course of the past eighteen months and also that the key to restoring some level of activity and growth in these markets is to encourage first time buyers to start entering the property market once more.

We have reported recently than the Royal Institute of Chartered Surveyors (RICS) has seen an increase in interest from first time buyers over the past couple of months, but although the interest is there, it seems that there is still a distinct lack of available funding for these individuals through suitable homeowner loans and mortgages.

Whilst the base rate of interest on homeowner loans has dropped significantly over recent months, there are still very few products available for first time buyers and many of these are fixed rate loan deals with rates of up to seven times that of the current bank base rate and even variable rate loans have a loading of around 3 per cent above base rate, according to research from Moneyfacts.co.uk. 

Even if first time buyers can afford to pay these high interest rates, many simply do not have sufficient deposit monies available to top up the maximum 75 per cent loan to value ratio, which is required to get a reasonable rate on the loan.

A spokesman for Moneyfacts said “First time buyers are meant to be the lifeblood of the property market, but with the average rate as high as 7.02 per cent, there is little incentive for them to step on to the first rung of the ladder. Even if you have found a property at a bargain price, if you don’t have at least a 25 per cent deposit, you will be paying a heavy premium and for many it is not a price they are prepared to pay.”

Both Northern Rock and the royal Bank of Scotland have announced that they are to make additional funds available for new homeowner loans, hopefully a substantial portion of this money will be directed towards securing some more competitive loan products for first time buyers, with more accessible loan to value ratios.