Buyers 'likely to need larger deposits'

25-Jan-2008

Anyone looking to buy their first property this year is likely to need a large deposit in order to secure a competitive mortgage deal.

That is the warning from the Royal Institute of Chartered Surveyors (Rics), which has predicted that demand for mortgages is likely to remain "sluggish" in the coming months.

Yesterday, the British Bankers' Association (BBA) said December saw a record low for mortgage approvals as the credit crunch and fears about the economy hit home.

According to Oliver Gilmartin, a senior economist at Rics, the upshot of the current climate is that first-time buyers are going to need money behind them.

"A more sluggish mortgage and housing market is set to continue in the near term, as financial institutions remain on high alert as to lending exposures," Mr Gilmartin said.

"Even the few undeterred by market conditions will to need to find even larger deposits to take the first step on the property ladder."

Recent research appears to back up Mr Gilmartin's predictions, suggesting that loan-to-value ratios are falling.

This is likely to mean that many first-time buyers are forced to turn to their parents for help.

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