It has urged FTBs to apply what they term as "20/20 vision" when appraising their opportunities to buy in the current uncertain housing market.
Paul Holmes, operations director at Firstrung, commented: "There has been four interest rate rises in the past twelve months and most market commentators would suggest that the housing market is now finally at a 'tipping point' which could result in rapidly falling values, particularly if the Monetary Policy Committee (MPC) raise interest rates by another quarter of one percent over the summer months.
"The Bank of England base rate is now at a level not seen since 2001 and many existing home owners will be now exiting their two and three-year tie-ins and be in for quite a shock as their mortgage rates adjust by up to two per cent. As such many owners, particularly amateur buy-to-let investors, may look for a quick sale.
"Online property sites are experiencing record levels of listings, not simply because of their excellent efficiencies as business models, but more likely as a representation of just how eager some sellers are to lock in their profits."
Holmes believes that opportunities for FTBs should come flooding in over the next 12-24 months, even if base rates hover at around at 5.5 per cent. If base rates increase to 6 per cent mortgage payments could be as high as 8 per cent.
He continued: "The MPC have administered medicine in order to curb inflation, which has had the resultant effect of beginning to rapidly cool the housing market. However, it would be premature of first-time buyers to believe that a first-time buyers market is finally here. The base rate may have to reach 6 per cent or higher to curb the inflationary effects caused by the huge growth in money supply over the past six years.
"With this in mind first-time buyers should apply some down to earth common sense to their first home purchase by using what we would term as "20/20 vision" - can you afford your mortgage if it is raised by 20 per cent from the starting rate? Similarly could you stand the loss if your property lost 20 per cent of its value due to the knock on effect of higher interest rates?"
Holmes suggests that a FTB should take this 20 per cent factor further and begin to offer substantially below asking prices to insulate themselves versus a serious housing market correction in values. Holmes points out that the investment bank Lehman Bros recently issued a statement in which they voiced concerns that house prices may be 15 per cent above 'fair market value'.
He added: "Extending the potential for a market fall further, why not begin to make offers at 20 per cent below asking price in order to insulate yourself against potential house price falls? With so much property available and mortgage levels falling for the past four months (according to figures the Bank of England issued recently) this would suggest that the buyers market is finally returning. However, this could be a slow process. It would be a shame if, having been priced out for so long, first-time buyers 'lost their nerve' and dived in without capitalising on the change in sentiment.
"Whilst many first-time buyers will have sympathy for distressed sellers it should be remembered that even a 20 per cent fall will only take average prices back to 2004-5 levels, a level at which first-time buyers were still struggling to get a foothold on the first-rung.
"Buy-to-let investors have operated primarily in first-time buyer territory, snapping up property suitable for first-time buyers. Many will have no sentiment attached to their investment and will need to exit to either minimise losses or lock in profits. Therefore first-time buyers must remove their preconceptions and act equally as 'hard-nosed' businessmen. Starter homes, whether new or re-sale, are rarely dream homes, therefore a first time purchase should be perceived as any other business transaction.
"That deposit, saved at huge sacrifice, could evaporate with poor decision making. If it's taken years to amass we would urge first-time buyers to be very precious as to how and where they spend it."
