Lenders wrote 190,000 loans for first home buyers last year but business economist BIS Shrapnel has forecast that the number this year will be 110,000 to 115,000.The BIS Shrapnel forecast is included in a survey of the first home buyer market released yesterday by mortgage insurer QBE LMI.First home buyers were encouraged to borrow last year by a combination of low rates and additional government grants. They played a big part in maintaining the growth of the housing finance market. At the peak in April and May last year first home buyers made up 28 per cent of all home loan borrowers but since the First Home Owners Grant Boost was withdrawn and rates started to go back up the numbers have dropped. First home buyers made up just 18 per cent of total dwellings financed in February.QBE LMI chief executive Ian Graham said the survey showed that in the period between August last year and February the percentage of households looking to purchase a home in the next 12 months remained steady, at around 25 per cent, but the proportion of first home buyers in that group dropped from 42 to 36 per cent. Graham said: "The phasing out of the boost and rising interest rates are discouraging first home buyers from entering the market."Graham said those first home buyers who were still in the hunt for a home had scaled back their ambitions. More said they would opt for an apartment or townhouse rather than a house. One area where first home buyers may not have adjusted their expectations to changed conditions is the amount of deposit they think they will need. Twenty-six per cent said they would buy a home with zero to five per cent deposit. Few lenders would be interested in dealing with such a group.More than 80 per cent of first home buyers expect to be able to buy a house with a deposit of less than 20 per cent.Graham said the expected fall in first home buyer demand was substantial but would not be as great as the 60 per cent fall in 2003/04 when the original Boost was withdrawn. He said: "There is a bigger pool of first home buyers in the market to help support demand, thanks to strong population growth in the main first home buyer age group - 25 to 39."