Article Avenue - free articles and downloads - First-time Buyers: Priced Out Or Poised To Strike?

With all the doom and gloom that has accompanied talk of the property sector and the wider economy over recent months, Britons may well have been put off the very idea of buying their own home. Prices have been falling for some time - a fact that would normally be welcomed by someone planning to make a purchase - but problems with getting the finance appear to remain.

Of course, before the credit crunch took hold those who wanted to take a step on to the property ladder often felt like the world was their oyster, with a myriad of deals at high loan-to-values (LTV) to choose from. But as banks have tightened their lending policies that choice has become more and more restricted.

Indeed, Moneyfacts.co.uk recently found that those who have only a small deposit are finding themselves increasingly limited. Just 71 mortgage products are aimed at people with ten per cent or less to pay down - that figure having stood at 204 in November of last year.

So is there any hope on the horizon? Or should those who have not yet acquired a mortgage resign themselves to a life of renting?

Well, Alliance & Leicester has this week announced that it is targeting first time buyers, introducing a product exclusively for that market. The three-year, fixed-rate deal will require a 15 per cent deposit - still some way above the 10 per cent that might be considered closer to ideal - but will come without a fee.

Mortgages director Nici Audhlam-Gardiner explained that the bank realises "it's hard enough for struggling first-time buyers to get on to the property ladder at the moment", with its own research showing that 1.8 million people have a deposit, but are waiting for a good rate.

This last point could prove to be key, as Moneyfacts.co.uk has found that despite the Bank of England having lowered the base rate from five per cent in October to 0.5 per cent now, many first-time buyers are yet to see the benefits.

Among those 71 products mentioned above, the average rate is 5.98 per cent - down less than one percentage point from the typical charge in November.

Nonetheless, with prices having plummeted it could be that the right time to make a purchase is approaching. Paul Holmes, chief executive of first-time buyer specialist Firstrung, explained that timing is crucial.

He recommended watching lenders closely, as they are likely to begin asking for smaller deposits when they expect prices to recover. "When they start offering mortgages with ten per cent deposits, freely available, that will tell a first time buyer that the market has bottomed out," he said.

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