FTBs may struggle to get a mortgage

First time buyers (FTBs) may find it more difficult to take out a mortgage in the future.

That is according to The Mortgage Lender, which says that tightening lending criteria is likely to prevent many young people from getting onto the property ladder.

The firm claims that 25 per cent of sub-prime mortgages in August 2007 would not be approved in October 2007.

It is because lenders have tightened their criteria following the US sub-prime crisis and the credit crunch which followed.

"Lenders are also tightening up on 'affordability', which is calculated from disposable income. With the higher rates even fewer people will get a mortgage – that is above and beyond the 25 per cent of applicants who already do not meet lending criteria," said David Titmuss from the firm.

"We believe that the potential impact upon the economy may be considerably more than most commentators have stated," he added.

FTBs were given a boost this month when the Bank of England chose to maintain the base rate of interest at 5.75 per cent for the third consecutive month.

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