Many first-time buyers trying to get on the property ladder are still finding it difficult to obtain high loan-to-value (LTV) mortgages, an expert has highlighted. Ray Boulger, senior technical manager at John Charcol, said that products such as these are becoming increasingly hard to get approved, although some lenders are willing to do so.
Those house-hunters who want to borrow 90 per cent of the price of their property will find some companies are willing to lend them the mortgage they need, he commented. "The proportion of applications that get rejected is much higher than people who are looking to borrow 75 per cent," Mr Boulger revealed.
Many mortgage lenders work on a credit scoring basis, which they use to determine whether or not a customer is likely to have their loan approved. The expert believes this is a significant barrier to first-time buyers, as obtaining a good credit score can prove difficult.
Mr Boulger suggested that the majority of first-time buyers will not have been involved in any sort of borrowing before, so giving them a credit rating is particularly hard. "That is being addressed to some extent by some lenders who have recently come into the market who are making a point of saying that they will make a decision on a human underwriter rather than a computer credit score," the expert claimed.
The Council of Mortgage Lenders reported on June 15th that first-time buyers made up the lowest proportion of house purchase loans since September 2007. First-time buyers accounted for 35 per cent of all house purchase mortgages in April, down from 39 per cent in March and 38 per cent in April 2009.
Overall, there were 40,000 loans advanced for house purchase in April 2010 worth £5.7 billion.