First-time buyers should beat the credit crunch

In the wake of the Bank of England's recent decision to hold interest rates at fiver per cent, the doom and gloom mongers have upped their claims that Britain's housing market is suffering its worst slump since the crisis of the early 1990s.

What's more, as lenders struggle with a global credit crisis, millions of homeowners across the country are likely to suffer over the coming months as mortgage rates join food and energy prices in steadily increasing while household income remains the same.

Not surprisingly, therefore, those people who chose to take a gamble on the state of the market and purchase their own home rather than sticking in the rental sector over the past few years, are somewhat worried.

Many experts have predicted that there is likely to be a "glut of repossessions" over the next few months as banks and building societies cut their losses and call in their bad debts, with the situation being likened to that of the United States, where millions have already lost their home after failing to make their mortgage payments.

According to the latest figures from the Ministry of Justice, the number of mortgage possession claims, which represent the first stage of the repossession process, increased by 16 per cent over the first quarter of 2008 alone.

Some 38,688 claims were made during the three month stretch in comparison to 33,344 in March, while the number of people threatened with losing their homes also increased by seven per cent over the same period.

Certainly, it looks like Britons who were all-too-eager to join the buy-to-let property goldrush are going to come out of the credit crunch with, at the very least, a bloody nose.

However, this needn't be the case for those people who have bought a property as a first home rather than a short-term investment could well be insulated against the market downturn, some experts believe.

Paul Holmes, operations director of Firstrung, explained: "Over the last two years the average first time buyer mortgage has been £115,000 [and] the average first time buyer buys as a two party couple. A £115,000 mortgage shared between two recent first time buyers both in work is very manageable."

While it is almost inevitable that most couples will have to cut some corners so as to meet their mortgage commitments, any talk of mass repossessions among this demographic could justifiably be viewed as over-the-top and unhelpful in a time of economic uncertainty.

Sadly, the same cannot be said for the family property area, where mortgages of £250,000 are only too common.

For those Brits who rode the market wave and upgraded from a three-bedroom to a five-bedroom property with the help of generous mortgage lenders, the next few months could be very trying indeed.