High street lenders have been increasing the number of loans and deals available to first time home buyers, but this could still fail to stimulate the market, amid fears that credit scores will need to be near perfect.

According to This Is Money, 332 deals are currently available to buyers with a 10% deposit, whereas two years ago the figure was 114, and last year it was still only 199. The average two-year fixed-rate is lower, at 5.51%, when it was 6.10% last year and 6.48% two years ago.

These figures, according to Moneyfacts, represent a saving of £89 per month on a £150,000 loan, when compared with the same borrowed amount two years ago.

HSBC has said it will lend a massive £3 billion in order to find 27,000 first-time buyers, whilst Halifax and Nationwide are also offering deals intended to spark and stimulate interest through appealing investment opportunities.

However, these deals are entirely dependent on the credit checking process, and many buyers find themselves falling at this hurdle. It can stem from simply avoiding the electoral roll, or never managing a credit card, and whilst many will feel this shouldn’t work against them as a potential buyer, they are stumbling blocks for gaining credit.

Having a proven financial history will help a lender to recognise you as a responsible borrower, capable of managing finances and paying back the owed instalments and interest payments on time and in full.

As a first time buyer you may also want to check home insurance deals, as comprehensive buildings and contents cover is popular among home owners.

Nearly half of all UK savings accounts pay interest rates of 0.5%, new research by financial information service Moneyfacts reveals.

Of these accounts, nearly half pay 0.1% or less, as many providers have made dramatic rate cuts in recent months. Moneyfacts reported that one in 10 savings accounts have cut their savings rates since last March, although 3.5% increased rates.

Today the Bank of England kept the official Bank rate at 5% for the eighth month in a row.

Michelle Slade of Moneyfacts suggested that interest is very low on some savings accounts because banks chose to cut their rates ahead of new rules stipulating that providers must give two months’ notice before they cut interest rates.

“It is savers, such as pensioners, who rely on the income from their savings to supplement their income who end up worse off,” she said.

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UK house prices rose 1.2% in October, marking the fourth consecutive monthly increase, according to the Halifax.

Since the beginning of the year, house prices have risen by 2.9%, and October’s rise was double that predicted by analysts. However, the average house price was £165,528, which is still 4.7% lower than October last year. Prices are now 7.1% higher than in April, when they had reached their trough following a 23% fall since the previous August.

Martin Ellis, the Halifax’s housing economist, warned that the recent rise in house prices was mainly due to demand for property outstripping supply. He added that low interest rates, reduced property prices since the summer of 2007 and a lack of available property had all contributed to rising demand for homes.

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Mortgage approvals rose to their highest level since March 2008 in September, the Bank of England has reported.

The number of mortgages approved for houses purchased rose by 3,000 in September to 56,000.
Non-mortgage borrowing by individuals shrank for the third consecutive month, representing the most sustained fall since records began in 1993.

Figures released by HM Revenue & Customs show a rise in house sales to 82,000 in September, double that of January.

“Lending activity has recovered in recent months, when compared to the start of the year, as buyers and sellers tentatively return to the market,” said Adrian Coles, of the Building Societies Association (BSA).

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The Financial Services Authority has ordered the GMAC-RFC mortgage lender to repay £7.7 million plus interest to 46,000 of its customers, after it imposed unfair charges on borrowers who fell behind with their repayments. The company has been charged an additional £2.4 million.

GMAC-RFC apologised and admitted some its charges had been excessive.

“In hindsight, we fully accept that for certain fees our estimates of the costs were not proportionate to the additional administration actually required,” said a spokesman for the lender.

“We will be writing to customers who incurred these specific charges when in arrears and will re-credit the charges plus interest,” he added.

Since its launch in 1998, GMAC-RFC grew to become one of Britain’s largest mortgage lenders, but it stopped offering new loans last year.

The FSA’s investigation into company activity between 2004 and 2008 revealed a series of failings, including “unfair and excessive” charges for people in arrears, the commencement of repossession proceedings before all other options had been considered, and a lack of proper training among staff for dealing with arrears cases and repossessions.

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Lenders will have to carry out rigorous checks on homebuyers’ monthly spending habits before issuing new mortgages, under new rules announced today by the UK’s financial regulator to clamp down on reckless lending.

Homebuyers will need to prove their ability to repay the loans, by providing details of their income, outgoings and any existing loans.

The Financial Services Authority (FSA) is also expected to ban self-regulation mortgages, where borrowers do not have to prove their income.

However, the FSA has stopped short of imposing caps on loan-to-value or loan-to-income mortgages, and a ban on 100% mortgages, deciding instead to crack down on risky lending.

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House prices continued to rise last month, fuelled by low interest rates on borrowing and a shortage of properties coming onto the market.

According to the Halifax, house prices increased by 1.6% in September, the third monthly rise in a row and the fifth that the lender has recorded this year. Last week Nationwide reported a 0.9% rise in prices last month, triggering hopes of a more rapid market recovery.

However, economists predict that the recent rise in house prices is likely to slow towards the end of the year and into next.

House prices have risen by 1.7% since the end of last year, to an average of £163,533, and by 5.9% since April last year, when prices had plunged to a low of just £154,490.

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The British Property Federation (BPF) has called for tougher regulation on buy-to-let mortgages. It said that the Financial Services Authority (FSA) should take the initiative on a “crackdown on reckless lending”, which would help refinance the housing market.

Currently, the federation said, buy-to-let mortgages are treated like business loans, whereas the majority of home loans, such as owner-occupier mortgages, are overseen by the financial watchdog.

The BPF said that it had discussed the status of buy-to-let mortgages with the FSA and Treasury as early as 2005. It added that all three parties had revealed a “wholesale awareness of dubious practice”, but that the FSA and Treasury “said the problem was the other’s responsibility”.

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HSBC, Britain’s largest bank, has promised to boost lending to first time buyers. The bank says it will lend a total of £1.5 billion to home buyers with very small deposits before the end of the year.

The lender, which has launched an aggressive campaign to increase its share of the mortgage market since the onset of the credit crunch, said it will boost lending to home buyers who have managed to raise a deposit of just 10%. HSBC has already lent £1 billion to borrowers in this category this year.

Martijn van der Heijden, head of mortgages at HSBC, said: “Houses prices seem to have bottomed and rates are low – and many of those who put off [buying a house] last year are starting to look around again.”

He added: “HSBC has been out there throughout the recession, staying open for business for our customers. While other lenders were in retreat, we became the UK’s largest lender in the first half of 2009 on a net lending basis.”

Before the collapse of Northern Rock, mortgages with a 90% loan-to-value ratio were widely available. However, lenders quickly removed these deals in early 2008 as the property market began to slump.

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The number of people in arrears on their mortgage payments has risen by 30% in a year, despite interest rates being set at a record low for the past six months.

51,000 more buyers fell behind by over three months on their mortgage payments in the second quarter of this year, it was revealed yesterday, bringing the total number of people in arrears to 403,000.

The scale of arrears has also increased, with those more than three months behind on repayments owing an average of £5,525, up from £4,916 a year ago.

Analysts yesterday warned that the figures could herald an increase in the number of repossessions as more people are made redundant later in the year.

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