FTBs face mortgage woe according to National Homebuyers
Many first-time buyers (FTBs) face financial difficulties because they are on interest-only mortgages.
[UKPRwire, Thu Feb 21 2008] That is according to website Fool, which was commenting after the Bank of England issued a warning over tightening credit conditions.
Fool highlighted that fact that 28 per cent of all new mortgages taken out in 2006 were interest only, which is double the number seen in 2002.
The firm warned that rising mortgage rates may lead to more people getting into financial difficulties as they struggle to keep up with mortgage repayments.
"In future, lenders may tighten the credit-scoring criteria and choose to reduce the maximum loan to value (LTV). This will put borrowers who have taken out 90 per cent mortgages at risk, especially if the value of their homes decline sharply when they remortgage," said David Kuo from Fool.
"The Bank of England's Inflation Report should set alarms ringing in the ears of vulnerable first-time buyers.
"Borrowers can choose to hit the snooze button if they wish. But a better idea is to get going and take action now before they get kicked out of bed by their lenders," he added.
Fast property sale expert Julian King adds, "Potential borrowers are still concerned that this really is not a good time to get afoot on the ladder.
"The knock-on effect of limiting the number of potential buyers is that homeowners continue to find the value of their property falling as buyers call the shots".
Mr King is a director of National Homebuyers, the UK's leading fast property purchase firm. The company arranges a guaranteed offer to purchase any property within days, regardless of property condition or location.