Mortgage ignorance holding back first-time buyer market

With 59 deals available from 21 different lenders, the number of products available to fuel this market has leapt from nine in 2010 and just three in 2009, according to the Mortgage Advice Bureau. This converts to over £210m worth of mortgage finance available to first-time buyers with a 5% deposit right now.

First-time buyer numbers have plummeted since the 1980s and 90s when over £500,000 people bought their first home every year, converting to 1,350 a day against 520 a day now.

Brian Murphy, head of lending at Mortgage Advice Bureau, said he thinks first-time buyers are stalling because they are unaware these products have returned and available again.

"Well over 85% of young renters aspire to become homeowners but the vast majority of these say the fact they cannot raise a deposit is the key reason for not buying. There is a widespread perception that a minimum 20% or 15% deposit is required and they just don't realise that there are now a lot more competitive 90% and 95% LTV mortgages back on the market.

"The first port of call for prospective borrowers should be to a mortgage broker as they can best assess which is the best product for their needs, but the fact that lenders are open to first-time buyers again is a really positive sign."