First-time buyers who are sceptical about entering the market may do well to hold out, Moneyfacts has claimed.

Research from the independent financial adviser has suggested that if the current trend of falling house prices continues, prudent buyers could secure both a cheaper property and a mortgage with a lower loan-to-value (LTV) band as well, thereby possibly reducing repayment commitments.

Citing figures from Halifax, the group stated that in October 2007, the average residential property in the UK cost 200,168 pounds. However, this month the typical house price stands at 173,350 pounds. As such, the average home is now worth 13.4 per cent less than it was a year ago. Therefore, if consumers had held back from entering the market last year and had put a deposit of 40,000 into a top-rate savings vehicle, they would have earned another 2,200 pounds to put towards a new property, which in turn, would also cost less than it would have done this time last year.

As such, while those who entered the market in October last year would require a mortgage of 160,168 pounds for a typical property, buyers looking at the same house this month would require a loan for home purchase of 131,150 pounds, a saving of 29,000 pounds in 12 months.

Furthermore, the group insisted that if the current rate of house price deflation continues, the same property would require a mortgage of 105,521 by October next year.

Alan Harper, head of mortgages at Moneyfacts, explained: “For first-time buyers, falling house prices are a godsend, as up until now many have been priced out of the market. By requiring a lower LTV product, you can get a much more competitive deal. Lenders are pricing for risk, so the smaller proportion of your property value for which you have to borrow, the lower the risk to the lender and the better the mortgage deal available. Unfortunately, we cant predict the future, so first-time buyers are taking a gamble if they choose to wait. It could be that market conditions mean rates are at a much higher level next year.”

For those who are looking to enter the market, taking out a personal loan may prove an effective way of raising the cash for a deposit. However, Mr Harper urged people to be prudent about when they choose to take the first step on to the housing ladder. For those who pick the right moment, substantial savings can be made, he insisted.

A personal loan may be of particular interest to those buyers who have got their sights set on a home in the country. According to a poll conducted by Halifax earlier this month, Brits are willing to pay a sizable premium for a property that allows them to enjoy the fresh air and tranquillity of rural life. Research carried out by the group indicated that consumers would add up to 20,000 pounds to the perceived value of the property depending on where it was sited. Applying for a personal loan may prove an attractive way to bolster a deposit on such a property.

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