First-time buyers will be impacted by LTV restrictions, says expert

Date:Thursday 17th June 2010
Author: Susanna Kavka

A government decision to limit the maximum loan to value (LTV) available to mortgage customers would hit first-time buyers the hardest.

This is according to spokesman Darren Cook, who pointed out that many people trying to get on the property ladder are already struggling to fund their deposits due to historically low savings rates.

Chancellor George Osborne was widely expected announce the move during a speech at Mansion House last night (June 16th 2010).

However, he only spoke of giving the Bank of England (BOE) new powers to avoid another housing bubble.

As part of the changes, a Financial Policy Committee will be established at the BOE, along with a new Consumer Protection and Markets Authority.

Also speaking at the meeting, governor of the BOE Mervyn King said its role should be to "turn down the music when the dancing gets a little too wild."

Commenting on the speeches, Mr Cook said it is unclear whether it will dictate responsible lending or "take the heat" out of the property market when needed.

"First-time buyers are the lifeblood of the property market and few are likely to be able to afford a 25 per cent deposit without any assistance," he remarked.