Interest rate decision provides 'no solace' for first-time buyers

11-Jul-2008

The decision to keep interest rates on hold will deal a blow to first-time buyers, it has been claimed.

Commenting on yesterday's maintenance of the five per cent rate by the Monetary Policy Committee, a spokesperson for online conveyancing firm Convex.net noted that although property prices are falling, high mortgage rates and deposits mean things are "still very tough" for first-timers.

"The decision to hold the rate at five per cent will not provide any solace for those struggling to enter the property market," said the site's managing director, Duncan Samuel.

He continued: "Although asking prices are coming down, mortgage rates are at an eight-year high and most prospective buyers are being asked for deposits of at least ten per cent, so things are still very tough, particularly for first-time buyers."

Mr Samuel went on to suggest the Bank of England is adopting a 'wait and see' stance amid rising inflation and worsening economic conditions.

His comments are in contrast to those of fellow analysts, who pointed out last month that "low-ish interest rates" mean mortgages are not significantly more expensive than last year.

FirstRungNow.com's Helen Adams acknowledged, however, that mortgage lenders' reluctance to lend to first-timers is leading more property seekers to work with their parents, either for help with a deposit or for other co-financing.

FirstRungNow.com - how to buy a house, from finding your first flat or first house, first time buyer mortgages, shared ownership, buying with friends, gifted deposit, part buy part rent - all a first time buyer could possibly need.

First-time buyers need big deposits Rate decision signals first-time buyer stability, says specialist

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