Rate cut 'won't help first-time buyers'
Published On 11 April 2008
Despite yesterday's interest rate cut, many first-time buyers will not be looking for a mortgage and a home in the near future, an industry expert has predicted.Duncan Samuel, managing director of online property conveyancing firm Convex.net, explained that the cut to five per cent was not enough to solve the most significant problem facing the UK housing market - the lack of first-time buyers.
He explained that in the past a 0.25 per cent cut in interest rates would have been enough to encourage more young people to get a mortgage and onto the property ladder. Now, however, he said tighter lending conditions from mortgage providers meant it was still hard for first-time buyers.
"Despite this cut, first time-buyers will still not be coming to the market in the current climate," Mr Samuel added.
"The combination of lenders withdrawing high loan to value mortgage products and a general feeling that the market has further to fall means first-time buyers are thin on the ground, and at the bottom of almost every chain you need a first-time buyer."
To improve the situation, Mr Samuel said that the government should further cut interest rates and look at "other ways of helping the first-time buyer - particularly through initiatives such as Stamp Duty reductions".
