FSA regulations could harm first-time buyers prospects

With the Financial Services Authority (FSA) set to impose a cap on mortgage lending and potentially ban 100 per cent loans, buying a home could become an even more difficult task.

The move comes too late to have its intended effect and will only serve to harm first-time buyers prospects, according to financial website moneyextra.com.

Managing director Richard Mason explained that restricting first-time buyers would have an adverse affect on the market as the housing industry relies on those people for buoyancy.

"Lenders should not allow the government to dictate their lending criteria," he suggested.

"Rather the FSA should focus on challenging lenders to ensure theyre operating comfortably within a stable and predictable property market."

First-time buyers may also be put off getting onto the property ladder by the need for a large deposit.

The latest research from moneyextra.com found that 90 per cent of the mortgages on the market require a deposit of at least 20 per cent.

A further slowdown in the housing market could see some homeowners decide to stay put and invest in home improvements such as conservatories or new bathrooms instead.

First-time buyer specialist Firstrung recently noted that buyers were being asked for deposits of around £28,000 for their first property.