Woolwich add to first time buyer’s woes.

Woolwich have become the latest mortgage lender to reduce the maximum they will lend from 95% to 90% of the property value. The trend, which first surfaced only a matter of weeks ago, has already been adopted by at least a dozen lenders including major players such as Britannia, Alliance & Leicester and Cheltenham and Gloucester. Others such as Coventry, Abbey and Nationwide, have either restricted the type of borrower who qualifies, or reduced the number of products available to as little as one. As lenders have continued to find it difficult to obtain funds and the housing market has stalled, they have withdrawn from what they consider to be the riskier areas of mortgage lending. However, it’s not all bad news for first time buyers (ftb’s). While those who already own property will be worried about falling property prices (some of the gloomiest forecasters predicting a 30% drop in values over the next two years), first time buyers will only see this as good news. In addition, a number of lenders have recently reduced many of their fixed rate mortgages, so making monthly repayments more affordable. While this tightening of lending criteria has left some borrowers having to double their deposit, at least they have the comfort of knowing that property is becoming more affordable as they save.