Your Money Haven

Mortgage problems 'good for first home buyers'

31 March 2008

Woes besetting the mortgage market are good for first-time home buyers, according to leading group of property experts.

Firstrung, which represents the interests of first home buyers, says that with the number of mortgage products shrinking by 60 per cent, this will lead to falling house prices and will benefit first-time buyers.

Paul Holmes, operations director of Firstrung, predicted that prices would fall by as much as 20 per cent and cautioned homeowners to be realistic about the true value of their home.

"I think there's a pause for breath at the sharp end of selling houses. People are dreaming about the house price ratio when they're looking and they have to price their houses in far more realistically," he said.

Mr Holmes said that first homebuyers would become the 'flavour of the day' among home builders who now have stock that they are finding difficult to sell.

"If first-time buyers think they've got a bargain, then fine, buy it. If not, they've waited this long so where's the harm in sitting out the market a little bit longer and watching as this drama unfolds," he added.

Drying up of credit on the money markets continues despite central banks across the United States, Europe and Britain injecting huge sums of liquidity into the systems.