House prices make first-time buyers compromise

A number of recent studies have shown that many people seeking first-time buyer mortgages find themselves priced out of their desired property and settle for second best.

A survey by the GE Money Home Lending and the Future Foundation revealed that 23 per cent of first-time mortgage buyers now lower their initial demands, compromising primarily in terms of space.

Mortgage providers Alliance & Leicester also reported first-time buyer settling for less, citing commuting concerns as an important factor in the choice.

Bad credit availability is also leading many young home-seekers to lower their ambitions. Often smaller flats in more densely populated areas are considered to be the best option.

Gerry Hall, head of mortgage marketing at GE Money Home Lending, said that having to compromise would not be disastrous so long as the more affordable products chosen were "tailored to their needs".

Stephen Leonard, director of mortgages at Alliance & Leicester, suggested that with house prices at current levels first-time mortgage buyers were right to compromise.

"Buyers should also be careful not to over-stretch their budgets and may opt for a short commute to work to help keep costs down," he said.

Latest government figures estimate the average UK house price to be £206,890.

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