New data sends mixed messages to first-time buyers

21-May-2008

New figures from the Council of Mortgage Lenders (CML) paint an ambiguous picture of the housing market during 2008 for first-time buyers.

On one hand, the lending industry body predicts that average house prices will be seven per cent lower in the fourth quarter of this year than they were in the same period in 2007.

Moreover, the CML anticipates that Bank of England base interest rates will fall by a further quarter of a percentage point this year to 4.75 per cent.

Both of these predictions will please first-time buyers, who have seen the price of first properties rocket out of their reach during the property boom of the last ten years.

However, on the other hand, the CML's gross lending figures also warn that credit will not be as easily available over the remainder of 2008 as it has been in the past.

Suggesting that mortgage approval figures will continue to fall from their already historically low levels, the CML warned: "The credit crunch has resulted in a gap in the availability of mortgage credit relative to demand. Lenders have changed their product ranges, tightened lending criteria and reviewed their pricing in order to maintain their individual ability to manage demand."

Last week, the CML expressed its support for government proposals for a shared equity fund, aimed at helping first-time buyers get onto the property ladder.

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