FTBs caught in non-conforming crossfire

Alongside withdrawing their affordability based mortgage products, first-time buyers could also come up against hurdles when it comes to lenders insisting on near faultless credit profiles, limiting their 100% mortgage offers and withdrawing from the 100%+ mortgage market with immediate effect.

Paul Holmes, operations director at Firstrung, said: "Our brokers used to be alerted of new first-time buyer mortgage products and positive changes on a daily basis. Since the sub prime 'fall out' in the US the only news has been detrimental in terms of firs- time buyer mortgage opportunities. We are already beginning to witness a revision of the 100% and 100%+ criteria and first-time buyers with less than perfect credit histories have seen their rates increase by up to 1.5%. We've also witnessed several mortgage offers being withdrawn, despite assertions that these offers were live for up to three months.

"The shame is that having been frozen out of the market for so long the majority of first-time buyers will now be perceived as a poor risk. This is not due to their personal circumstances changing, it has more to do with lenders being forced to re-assess their exposure based on what the bond market will ultimately purchase."

With the inevitable credit crunch in mind, Holmes continued: "We will only get to know the future of the more adventurous first-time buyer mortgages once the money already earmarked for lending versus specific criteria has in effect run out. Only then will we be in a position to determine just how much appetite originators and the bond market has for syndicated loan books that have 100% or 100%+ product.

"Those lenders such as Northern Rock, who have presumably offered their Together range off balance sheet, may simply wind down these mortgage offerings. This would be a shame as first-time buyers are not speculators and moreover are not reckless borrowers, they simply want to purchase their first home.

“The average first time buyer loan is 135K with a purchase price of 150K. This hardly compares to lenders exposure in the buy-to-let industry where an average landlord can have multiple loans with questionable equity, particularly if they indulged in the new build market where many units lie empty despite having loans attached."