House market builds up: Upbeat bulletins from lenders and estate agents hint at resurgence

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THE HOUSING market could have finally seen the end of its long, hard winter judging by several pieces of good news from lenders and estate agents.

But the thaw is certain to be long and messy, which should ensure that first-time buyers will be pursued eagerly by house-sellers and mortgage lenders alike, perhaps for years to come.

At the moment they are being wooed with loan rates of less than 5 per cent. The problem is sorting through the various terms and conditions to decide which will be best value in the long run.

Short-term, low-rate deals are prominent. The Cheltenham & Gloucester Building Society has a fixed rate of 4 per cent on offer to first-time buyers, but it lapses next February, when borrowers will be exposed to the movements of C&G's standard variable rate.

National Counties Building Society is offering a rate that looks astonishingly cheap - 3.99 per cent, which is a four- point discount on the society's standard rate - applicable only until 31 December.

There is certainly more activity in the house market. Halifax Building Society said that in February sales through its estate agents reached their highest level for two years.

Nationwide Building Society's monthly house-price index showed an average rise of 1 per cent in the month to the end of March.

David Goldsworthy, president-elect of the National Association of Estate Agents, said: 'Prices are hardening. A house on the market for pounds 100,000 might have sold at pounds 95,000 until recently, but now the owners might be able to get pounds 97,000.'

Clouds still hang over the market. Figures released by the Treasury last week showed that more than one million people have mortgages larger than the value of their homes. These people will have difficulty selling unless they are eligible for one of the few negative-equity assistance schemes run by building societies.

A survey of young people by the Halifax in February showed a rise of 34 per cent in the number of those considering buying a home, compared with the figure for last July.

But demographic factors may be working against first- time buyers being the market- movers that they were back in the 1980s.

NOP, the market research organisation, says that the number of first-time buyers entering the mortgage market has dropped by almost half in the past five years.

First-time buyers also face more difficulty getting into the market, since few lenders are willing to lend more than 95 per cent of a property's value.

Some of the best mortgage deals are for those who can manage substantial deposits.

The Coventry Building Society, for example, is offering a three-year fixed-rate of 5.99 per cent on loans up to 70 per cent of valuation.

People who want to borrow between 70 and 95 per cent pay 6.49 per cent.

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