As inflation on house prices has raised the bar higher for FTBs, figures have showed that 25,600 buyers took their first step onto the property ladder in February, in comparison with 26,400 in January.
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Despite the seasonal slump caused by Winter finance limits, the monthly total was still down in comparison to previous years, and was the lowest level since March 2005. This followed reports that buyers were now opting for a fixed rate mortgage to make their repayments immune to interest rate rises.
Michael Coogan, director-general of the Council of Mortgage Lenders, said: “With the chance of at least one more interest rate rise this year, FTBs are taking the sensible option of taking out fixed rate deals and locking into the payment security they provide.”
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Ed Stansfield, property economist at Capital Economics, said: “FTB numbers have been gently drifting down. They do not have much of a choice – either stretch themselves with larger loans or sit out and wait for easier times. It is very tough at the moment. This cannot be good for the long-term outlook for the market. It is another argument for expecting the market to get softer as the year goes on. The outlook for 2008 will be pretty soft.”
Peter O’Donovan, mortgage manager at Bestinvest, said: “FTBs are either looking to see what they can afford and getting as much as they can and then managing to afford it, or they are waiting on the market to see what happens and taking the sensible approach.”
