An independent broker says first-time buyers are losing out because of mortgage market regulation.
The broker said that today’s lending climate favours buy-to-let investors over home buyers.
The Mortgage Market Review was introduced in late April 2014 but applies only to the owner-occupier market.
Private Finance said that the new affordability rules are not supporting home ownership.
In contrast, it said, buy-to-let lending remains unregulated with lenders free to advance up to 85% interest-only mortgages to property investors.
Simon Checkley, managing director of Private Finance, said: “We are calling on regulators and policy makers to consider the effects of MMR on residential lending levels.
“If maintained at their current level, they could potentially exclude an entire generation of home buyers from the property market and force them into the private rental sector for years to come.
“Stifling activity in the housing market increases house prices by reducing supply.
He added: “Not allowing first-time buyers access to mortgage products similar to those available to buy-to-let investors snapping up the same properties that first time buyers would buy if they could, is unfair.
“Our view is that the Government and the regulator should work together to encourage lenders to accommodate all home movers with more innovative and flexible products.
“One example of this would be to offer the first two years of the mortgage on an interest-only basis, progressing to graduated capital and interest payments afterwards.
“This is exactly the kind of product that would offer the long term stability that residential borrowers require.
“However, our fear is that if the authorities do not collaborate further on this, we will simply continue to lock a generation of home buyers out of the market and face the inevitable consequences in years to come.”