Mortgage Misery - The 3 hurdles faced by First Time Buyers

The "Credit Crunch" refers to the fact that it is now more difficult for a First Time buyer to get a mortgage than at any time since the 1970s - but why is it harder? What have the banks actually done to make it harder. There are 3 main hurdles that First Time Buyers have had put in front of them.
1. Higher Lending rates. In 2006 it was possible to get a 2year fixed 125% mortgage from Northern Rock at 5.79%. Now even a 90% 2 year fixed rate is going to cost upwards of 7%. However - there is a way to get round this. By negotiating with the vendor to achieve a "vendor gifted deposit" of 10%, it is possible to get a rate of 6.44%. On this rate a mortgage of £92000 is going to cost less than £500 - still cheaper than renting. It is important to remember that although 6.44% may seem high, rates are still historically low. If you can own a property (even on interest only) for around about the same monthly cost than renting then it always makes sense to make the purchase - particularly when your deposit is being paid for you.
2. Larger deposit required. "LTV" is the key acronym of the Credit Crunch. It stands for Loan to Value and refers to the size of your deposit as compared to the value of your house. 10% LTV good/ 99% LTV bad. Firstly, the "Together" mortgage, where a FTB was given enough money to purchase the property and surplus cash up to the lesser of 25% of the property value or £30k. Very soon afterwards 100% mortgages went. 95% mortgages are still in existence but are as rare as the rocking horse proverbial. In reality though a FTB can get a 90% mortgage by once again negotiating a 10% Vendor Gifted Deposit,
3. Banks have added more rules. This is ture. In terms of properties, FTB's shouldn't go out looking to max themselves out with 5x joint income mortgages - banks just wont stretch that far at the moment. Banks have also taken a distinct dislike to New Build Flats but who can blame them? Thousands of these are lying empty across England. Obviously the Credit Crunch has also meant that those with Bad credit will now struggle to get a mortgage. Is this surprising though? If you have bad credit the get used to renting. For the frest of the First Time Buyers ot there though, if you are 18 and earning, have ID and a Credit Report then you are likely to be eligible for a mortgage.
In conclusion, don't believe the hype in the newspaper. It is true that the Credit Crunch has meant that rates have went up, LTV's have came down and criteria has tightened but all this must be weighed up against the fact that house prices have fallen and many, many vendors have became more realistic on prices as opposed to shoving it on the market at a ridiculous price and waiting for the market to catch up.