Renting to remain popular as mortgage lenders get strict

15 2008
Thousands of prospective first-time buyers will be opting to stay in the rental accommodation sector for a while longer following the news that two of the UK's biggest mortgage lenders have upped their borrowing criteria.

Largely influenced by the global credit crunch, both Alliance & Leicester and the Britannia building society have announced that those looking to get onto the property ladder will now be required to pay a ten per cent deposit up front rather than the previous five per cent.

On average, this means first-time buyers will need to save up £14,783 before they can think about buying their own home.

In addition, a number of other lenders have also tightened their criteria as the credit crunch hits home, the financial website Moneyfacts has reported.

"It is not hard to understand why this pattern has emerged," said David Knight, mortgage analyst at the website.

"With mounting evidence that housing prices are cooling, combined with the increasing number of borrowers facing debt problems, it is not welcome news for those consumers with only a small amount of equity."

Following the near-collapse of Northern Rock, lenders have moved away from offering 100 per cent loan-to-value products, Mr Knight added. ADNFCR-1219-ID-18426909-ADNFCR

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