First time buyers are anxious to buy but they face many more hurdles than the first time buyers of years ago.  Before the credit crisis it was much easier to qualify for a mortgage and deposit levels were much lower.  Despite the fact that interest rate levels are very cheap and house prices are much lower it is much more difficult to bring all the parts together that are required to make someone a homeowner.

If it wasn’t already difficult enough it appears that things are going to get tougher for first time buyers to gain a mortgage approval.  Experts are warning that lending is tightening up and that is bad news when one realizes how little it had actually eased.  Lenders are also raising their interest rates and lowering their loan to value levels. 

The cost of lending has increased and lenders are passing the extra cost onto borrowers.  This has pushed the interest rates on mortgage offers upward.  This is also the reasoning behind lenders giving notice that they are increasing their standard variable rates.

Unfortunately without first time buyers coming onto the property ladder it makes things difficult for those already on it.  Homeowners need first time buyers to purchase their starter homes so that they can upgrade when they need to do so.  They also need first time buyers to flow onto the ladder to keep house prices at a healthy level which helps determine property values.  A home purchase is an investment and everyone wants a good return on their investment which comes in the form of equity for a homeowner.  It is that equity that is often released through a remortgage that homeowners use for maintenance and refurbishing the property.  As house prices have fallen so has equity.

First time buyers are badly needed for the housing market to rebound but they face many hurdles and in the months ahead they will be facing more.  The Financial Services Authority has new guidelines that will require verification of income as well as other rules that will keep borrowers out of trouble.  Yet, it means stricter and harder lending criteria and in an already tight fisted and high deposit lending environment things will only be harder for first time buyers to achieve home ownership.