Research revealed the number of 95% Loan-to-Value loans lent tumbled from 245,000 in 2006 to 28,000 in 2009. This is a decrease of 89%, resulting in approximately 100,000 first time buyers being excluded from the market year on year since 2006.

These findings from Genworth Financial give ballast to the argument that a generation of aspiring homeowners could be lost as the bottom rung of the housing ladder becomes out of reach for all but the well-off.

First-time buyers think the government should be doing more to help.

Earlier in the year, housing minister Grant Shapps stressed the importance of getting first time buyers onto the property market.

In his Age of Aspiration speech, he said: “The coalition government has agreed to promote shared ownership schemes and help social tenants and others to own or part-time their home.”

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Angel Mas, president of mortgage insurance Europe at Genworth Financial, said: “Our research indicates that hundreds of thousands of first time buyers have been excluded since 2006. If cuts are made in social housing then we believe that potentially a whole generation could be prevented from ever buying their own home.”

Spending review

The UK government is expected to reveal its plans for the future of state-backed homeownership schemes in this month’s Comprehensive Spending Review.

Statistics from FirstRungNow.com suggest 93% of new buyers think the state should do far more to help aspiring buyers. At the moment, in its absence, the latest Council of Mortgage Lenders figures suggest 84% of first-time buyers need parental help to buy compared with 37% in 2005.

Helen Adams, founder and director of first time buyer website FirstRungNow.com, said: “The Government has already all but abolished Stamp Duty for first-time buyers in most cases which is a step in the right direction, but the availability of shared ownership properties could be greater as well as rent-to-buy schemes.”

She added: “The authorities have access to a high number of vacant ‘social’ properties that could be identified and offered for sale on a part ownership or lease option basis.”

She continued given the UK deficit, the banks and building societies are in a better position to incentivize first time buyers and stimulate the market as a whole.

The banks

The Bank’s Credit Conditions survey made it clear that banks’ lending policies combined with the current economic conditions show no sign of loosening in first-time buyer’s favour as credit scores continue to tighten.

Mas said: “First-time buyers are not well served by the current market for a number of reasons: First, there is pressure on lenders to be prudent. Second, there are misconceptions about high LTV risk and that it is equivalent to ‘subprime’. Finally, there is no real incentive for lenders to serve this part of the market from a capital point of view.”

Government HomeBuy schemes

Many see shared ownership schemes are one of the most straightforward ways to help first-time buyers hoping to join the property ladder as lending criteria gets stricter.

Gemma Thompson from the Housing and Communities Agency (HCA), said: “First-time buyers have the option of buying a home through one of the six government HomeBuy schemes, to help get their foot on the property ladder.”

“The first is HomeBuy Direct Scheme that provides equity loans to help first-time buyers. The £300m scheme enables people with small deposits to buy a new home with finance for only 70% of the sale price.

“The remaining 30% is covered by a five-year interest-free loan from the builder and the HCA. It removes the need for a large deposit, one of the biggest obstacles for would-be buyers, and a smaller mortgage means lower repayments every month,” adds Thompson.

Buyers can also get onto the New Build HomeBuy Scheme, where the borrower shares ownership of their home with a housing association.

A Social HomeBuy scheme helps local authority tenants to buy their homes and in the Rent to HomeBuy Scheme, a buyer pays reduced rent on a new-build home, enabling them to save for a deposit and then purchase the property.

The Co-operative Financial Services launched a 100% shared-homeownership mortgage scheme this week based on its standard range. Borrowers can take up to 75% of the property value from The Co-operative Bank, with the partner or housing association involved lending the remaining 25%.

Co-op spokesperson Jenna Moss, said: “Open Market HomeBuy is beneficial for key public sector workers who want to purchase a home. The scheme allows their property to be funded by a conventional mortgage or savings which are supplemented with the assistance of an equity loan.”

Which way now?

FirstRung’s Adams said: “I do not think the government is in a position to do much to help first-time buyers – they are already being helped with the Stamp Duty holiday but with job cuts almost inevitable and employment uncertain, I think funding for HomeBuy schemes will be cut in the spending review.”

All eyes will be on the Comprehensive Spending Review on the 20 October to see whether Grant Schapps can scrape together both the finance and the political backing to carve out an ‘Age of Aspiration’ for first-time buyers. But given the depth of the cuts to come, few are hopeful first-time buyers will emerge as one of the government’s biggest priorities.