Where, especially in London, are first time buyers supposed to find a deposit of 24%? That's a huge amount of money.
House prices fell to their lowest level for 15 months in August, a survey published today reveals, as the number of potential buyers continues to be limited by a shortage of mortgage finance.
The Royal Institute of Chartered Surveyors (Rics) says a greater number of surveyors reported falling prices last month than those that saw increases, with an index of views dropping by eight points to minus 32, the lowest level since May 2009.
The fall is a result of an increased number of sellers, coupled with fewer new buyers, creating a larger pool of available property and, consequently, lower prices.
Rics' update comes a day after the Council of Mortgage Lenders (CML) reported a continued reluctance among mortgage providers to lend to first-time buyers. Despite the overall number of home loans increasing by 7 per cent in July, compared to June, the number of mortgages written to first-time buyers fell by 2 per cent.
First-time buyers were on average being asked for deposits of 24 per cent in July, up from 21 per cent in April and May. Overall, the CML said that mortgage volumes "still represent a very weak market".
As long as lenders are making these ridiculous demands, we will never see this market become buoyant again.
This seems to be the story of this recession. We bailed out the banks and are waiting for them to start loaning the money we gave them. But they are attaching so many ridiculous preconditions to obtaining a loan that nothing is happening.
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