Homebuyers still face credit crunch hurdle

With house prices expected to fall this year and talk of further interest rate cuts, people looking to buy for the first time have reasons to be cheerful.

However, first-time-buyers have been warned that while conditions have improved, there remains a significant hurdle to entering the property market.

Simon Rubinsohn, chief economist at the Royal Institute of Chartered Surveyors (Rics), pointed out that the effects of the credit crunch meant borrowers might find it hard to secure a good deal on a mortgage.

"A key issue for first-time buyers eager to take their first step onto the property market in this climate will be the willingness of lenders to provide finance on attractive terms," he said.

"The slippage in money market rates since the start of the new year suggests that there is more chance of further interest rate cuts being passed on more fully to borrowers but just as important will be the willingness of lenders to maintain loan to value ratios."

The Bank of England cut interest rates at its last meeting in December, but despite talk of further reductions this year, inflationary pressures remain a major concern.


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