According to the firm's 'Mortgage Map' the number of first-time buyers has dropped by one fifth over a period of just six months.
Since March 2007, the percentage of people classed as a 'first-time buyer' has dropped by 20 per cent, suggesting that rising house prices, rising interest rates and the dwindling pool of properties available to first-time buyers are decimating the first-time buyer market.
The research also shows that, amid worries over the likely direction of base rate and an influx of lenders upping their rates, homeowners are increasingly turning to fixed rate deals of between one and five years in order to provide peace of mind for their monthly mortgage payments. 43 per cent of borrowers are on a fixed rate mortgage of between one and five years, compared to 39 per cent in March this year.
Louise Cuming, head of mortgages at moneysupermarket.com, said: “It looks like the attrition of first time buyers as they either move out of owner occupation or onto second time purchases is occurring at a much faster rate than new first-time buyers coming into the market.
"The past month has been fraught with uncertainty and lenders have begun acting independently of the Bank of England in terms of rate pricing. It's not surprising some potential first-time buyers are getting cold feet and steering clear of home ownership, and the latest industry figures from the CML seem to be painting a similar picture albeit only measuring homeowners, with the percentage of first-time buyers falling 6 per cent against the total borrowing population for the first half of this year compared to the same period last year.
"First-time buyers are the lifeblood of the housing market and provide essential liquidity, so the fact this segment is getting smaller is worrying for the economy as a whole."
