First-time buyers need low loan-to-value

Date:Monday 18th January 2010
Author: Max Freedman

First-time buyers need to have a lower loan-to-value (LTV) ratio in order to get into the market, in the view of one mortgage specialist.

Catherine Hearnden, director of MyMortgageDirect, said that offering a low interest rate is not an incentive to buy a property for someone who is struggling to get together a deposit.

She explained that an affordable mortgage is of no use to a prospective buyer who cannot get the cash to make the first upfront payment.

"I think more schemes that allow them to borrow deposits is the thing really, [we need] more government schemes that are available to more people," Ms Hearnden added.

Her comments follow a statement from the Council of Mortgage Lenders, which showed that homeowners in November were using less of their income to pay off their mortgage interest than at any other point in the past five years.

Home movers especially are enjoying the low rates, as in November 2009 they needed an average of 10.6 per cent of their income to cover their mortgage costs, compared to the 11.1 per cent used in the previous month.