We need to promote the value of advice, says Phil Whitehouse, head of The Mortgage Alliance (TMA)

Conspiracy theories have been around for years with many far more thought provoking then others. Originally such theories were often sneered at and treated with some degree of contempt. But as our world becomes more and more complex and the amount of information gathered by various governments, institutions and individuals increases this is now a much more commonly used term which is not necessarily attached to such outlandish beliefs as in the past. Without touching on alien sightings, moon landings, crop circles or even ‘Dianagate’, it’s evident that theories are apparent in everyday thoughts whether badged up as being a part of a conspiracy or not.

I’m sure many first-time buyers, self-employed people, contractors and small business owners have all formulated their own conspiracy theories as to why the lending community appears to be ignoring their requirements. Of course in reality this is hardly the conspiracy some may think as many lenders are still trying to make provision for these types of borrowers. But, in truth, there are still some large overriding factors that continue to influence funding and criteria which makes lending to such individuals difficult for many providers and it’s clear that many borrowers are continuing to be hit hard by current lending conditions.

According to the recent Council of Mortgage Lenders’ (CML) monthly regulated mortgage survey, first-time buyers have dropped to their lowest proportion of the mortgage market for three years. The CML reports that the figure dropped from 38% in June to 34% in July and is at its lowest share of the market since the start of the credit crunch in August 2007. Loans to first-time buyers declined to 19,400, worth £2.4 billion, in July, from 19,700, also worth £2.4billion in June and from 20,100, worth £2.3 billion, in July 2009.

First-time buyers had average LTVs of 76% in the month, unchanged from June but up from a recent trough of 79% in April and May. But low interest rates mean that interest payments continue to take up a relatively modest share of income. At 13.2% this was down slightly from the previous month and the lowest it has been since early 2004.

Commenting on this survey Paul Samter, economist at the CML, says: “The increase in the prevalence of repayment mortgages is likely in part to reflect the anticipation of regulatory changes by the Financial Services Authority to limit the availability of interest-only mortgages.