LTV ratios to hit first-time buyers

22-Jan-2008

The downward trend in loan-to-value (LTV) ratios is likely to hit first-time buyers hard this year.

That was the warning from the Royal Institute of Chartered Surveyors (Rics), which has predicted that the lending market will become increasingly hostile during 2008.

In a statement issued in response to figures from the Council of Mortgage Lenders (CML), Rics warned that despite a record year for lending last year, conditions were now much tighter.

"The tougher lending environment is likely to be particularly problematic for first-time buyers," Rics said.

"Lower interest rates may provide some help as far as financing a mortgage is concerned but with many lenders scaling back on loan to value ratios, the need to find even larger deposits could prove a more powerful obstacle for those hoping to take their the first step on the property ladder."

Recent figures show that a number of lenders have adjusted their loan-to-value ratio, meaning they require a larger deposit before approving a loan.

This can be particularly problematic for first-time buyers as they often struggle to raise a large deposit.

An increasingly hostile market could see more people considering shared-ownership schemes or turning to their parents for help.

Credit squeeze hits mortgage lending Credit squeeze still an issue for first-time-buyers


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