New research published by the Halifax, the UK's largest lender, shows that whilst first-time buyers (FTB) are typically older and more affluent, support for them to get onto the housing ladder is lacking - from most lenders and the government alike.

The findings are part of Halifax's 10-year review of the first-time buyer market.

The number of first time buyers coming onto the market is at its lowest level since records began in 1974. 253,000 buyers entered the market for the first time in the first six months of 2002, compared with just 174,000 during the same period this year – a 32% fall, according to figures issued by the Council of Mortgage Lenders.

Phil Jenks, Head of Mortgages at Halifax, said:

"First time buyers are the heartbeat of the housing market. They may be older and wiser, but they still need specific help to get onto the housing ladder. This is particularly true in London and the South East.

The average deposit paid by first time buyers across the country is now nearly £20,000 – leaving even dual income households hard pressed to find a deposit."

Key findings:

• House prices

The average price paid for a house by a first time buyer in the UK is now £103,294 - 128% higher than 10 years ago. Not surprisingly, FTB's in Greater London pay the most for their first home – an average house price of £193,508 – over three times more than 10 years ago (£63,881). FTB's in the north pay on average £60,605 for their first home, a 71% increase in the last ten years (£35,456).

• Cash is king for FTBs

The average FTB now puts down a deposit of £18,950 compared to just £5,433 ten years ago – a 250% increase. The average deposit made by FTB's in the south east has grown the most (381%) in the last 10 years, from £6,169 in 1993 to £29,669 in 2003. The highest average deposit is currently in Greater London at £40,095.

• FTB's are older and wiser

The average age of FTB's is gradually creeping upwards – from 32 years in 1993 to 33 years in 2002 according to CML. The youngest FTB's can be found in Northern Ireland, North West, East Midlands and, most surprisingly, Greater London where the average age is 32 years. The oldest FTB can be found in Scotland where the average age is 35 years, although this has fallen steadily over the last 10 years from 38 years in 1993.

• Affordability

The UK average house price to earnings ratio for FTB's was 3.92 in 2003, compared to 2.46 in 1993. The highest ratios are currently seen in Greater London (5.75), the South East (4.98) and the South West (4.71). The lowest are Scotland (2.64), Yorkshire and the Humber (2.74) and the North (2.55).

This is a much different picture to 10 years ago. In 1993, the UK average house price to earnings ratio for FTB's was 2.46 – with all regions being very close to this figure. The widest variations were seen in the Greater London (2.66), the West Midlands (2.54) and the South West (2.51). This further highlights the widening gap in FTB affordability between North and South.

The impact of the lowest interest rates for 50 years has meant that, for the majority of FTB's, affordability remains very good despite the high price to earnings ratios, particularly in the south. The average first time buyer in the UK is spending just 16.5% of average gross earnings on mortgage payments, compared with 18% in 1993 and 22.8% five years ago.

Government help disappears

In 1993 the government ended its home purchase assistance scheme (HPAS). The scheme offered FTB's specific financial help through a £600 interest free loan to those FTB's who met the relevant criteria and who saved for their deposit with either a bank or a building society. The scheme was linked to regional house prices and financial help was higher for those FTB's who lived in higher priced areas.

Mortgage interest tax relief (MITR), which enabled borrowers to obtain tax relief on their mortgage payments, was introduced in 1983. Although this tax relief remained a main-stay of Margaret Thatcher's term in office, successive governments have gradually phased out the tax relief. It was finally abolished in April 2000.

MITR was an invaluable help to home-owners. In 1988 for example, mortgage tax relief effectively reduced the mortgage costs for a first time buyer by £954 per year.

During the latter half of the 1990's rising house prices have dragged more home-owners, and therefore more FTB's, into the stamp duty net. The average FTB now pays £103,294 for their first home – meaning that they face a Stamp Duty charge of over £1000 - an additional cost for already cash-strapped FTB's.

The average FTB deposit is now nearly £20,000 - something which even dual income households could find difficult. Specific government action such as targeted grants to FTB's (and key sector workers) could be a way forward.

Lenders need to play their part as well

FTB's currently need to work hard to find the right mortgage deal for themselves. Only a handful of lenders offer 'First Time Buyer' special mortgage deals despite the vast range of offers available to existing homeowners or people moving home for a second or subsequent time. FTB's need advice, expert knowledge and offers which allow them to cut the costs of buying a new home as well as helping them reduce their mortgage repayments, particularly in the first few years when cash flow is likely to be tight.

According to the independent financial product research company, Defaqto, of the estimated 3,000 mortgage products currently available in the UK – just over 2 per cent of them are designed specifically to help FTB's get a foot onto the housing ladder.

A greater number of FTB specific deals – which combine competitive rates, FTB specific offers, flexibility and improved access (such as smaller deposits) – would help FTB's to get a foot onto the housing ladder.

David Lee, Research Director at Defaqto, said: "Those lenders which offer specific FTB products should be congratulated.”

“At the moment, the first time buyer has to take their luck with the rest of the home-buying population. It would seem that little consideration is taken of their very specific needs.”

“For example, at a time when first time buyers would benefit from certainty of payment or help to reduce their costs, few lenders offer specific fixed rate mortgage deals or special offers to help them."