Cash-strapped first-time buyers living in expensive areas have seen their mortgage choice restricted as banks have targeted wealthy customers instead. New rules were introduced by the City watchdog, the Financial Conduct Authority (FCA), in 2014 which capped the number of mortgages that banks could offer to customers borrowing more than 4.5 times their income. The regulations were designed to stop banks from returning to the poor practices seen before the financial crisis, when few checks were made to see whether a customer would be able to repay their loan. The cap meant that only 15pc of a mortgage lender’s customers could borrow more than 4.5 times salary. However, the rules have punished first-time buyers and others on middle-incomes who are trying to buy homes in expensive locations. These customers typically need to borrow greater sums of money in order to afford a property. In some of the most popular towns and cities, even those on above-average salaries can find it difficult to find modest homes which cost less than 4.5 times their income. However, these are the customers who have seen their mortgage choice limited, a report by the FCA has found. Since the rules were implemented, there has seen a marked decrease in the number of loans being given to struggling young borrowers. For example, the study found that the proportion of 5 times income loans to first-time buyers had fallen from 40pc to 32pc since the rules were implemented. Instead, banks have concentrated on attracting customers with high wages instead, with the salary needed to take out high loan-to-income loans growing from £41,951 to £48,953. This is well above the average salary of £30,420. High earners have also benefited from cheaper monthly bills as the average cost of these mortgages has decreased since the new rules were introduced. However, analysts said this was largely because the average mortgage rates had fallen across the board in the last five years, rather than being an effect of the cap. There has been a further shift among mortgage lenders towards customers in the more profitable markets of London and the South East, leaving those in other areas of the country facing a more difficult task to take out a loan. Sarah Coles of Hargreaves Lansdown, a stockbroker, said the FCA had built a “higher wall” for first-time buyers to climb before they could take out a loan. “Since the introduction of the cap, lenders can’t offer loans of more than 4.5 times salary to more than 15pc of their customers,” she said. “This helped bring much-needed security to the industry, which is now far less exposed to large numbers of customers borrowing many multiples of their earnings. “But it also encouraged lenders to cherry pick their 15pc - offering higher loan-to-income ratios to people who already own a home, who have large incomes and are buying expensive houses with large deposits. This has made life more difficult for first-time buyers.” Mrs Coles said affected first-time buyers would have no choice but to save for longer, or turn to their parents for financial support.