Research from the Council of Mortgage Lenders has found that the number of first-time buyer loans fell to 17,300, almost a 50% drop compared with the same period last year.
LTV ratios sunk to levels not seen since the early 1990s, with the average first-time buyer needing a 15% deposit compared with 13% in June.
The data also states that the average amount lent to first-time buyers was 110,000, equal to an average 3.24 x salary – the lowest income multiple since July 2006.
A spokesman for the CML says that recent government measures aimed at luring back first-time buyers will have a minimal effect on the market. He says: “I think the Stamp Duty measure is going to have an impact but I’m not sure if it will have much effect on affordability for first-timers.”
The spokesman adds that the most any buyer stands to save on the tax at the higher end of the 175,000 threshold is 1,750.
He says: “The average first-timer is now having to produce a deposit of more than 19,000, so a saving of less than 2,000 in Stamp Duty will have a modest impact.”
Nicholas Leeming, director of Propertyfinder.com, says: “Regardless of Stamp Duty, most consumers simply cannot get mortgages in the prevailing market conditions.
“The government’s plan to help 10,000 first-timers is a drop in the ocean. There needs to be a greater focus on getting the market moving rather than tinkering with the tax system through government schemes.”