News
15-5-2007
Mortgage Affordability Hits New Low
The Council of Mortgage Lenders (CML) said the typical maiden homebuyer spent 18.3% of their income on mortgage interest payments in March, up from 16% in the same month last year.
It means that the proportion of first-time buyers' salary consumed by mortgage payments is at its highest level since 1991, records show.
The CML also revealed that the size of loan compared to salary has edged up in the face of high house price inflation. First-time buyers in March took out a home loan that was on average 3.31 times their income, up from an income multiple of 3.15 in the same month in 2006.
The increasing costs of home ownership is clearly deterring many potential first-time buyers from entering the market, the lenders' association said.
Although the number of maiden homebuyers increased in March to 33,100 from 26,100 in February, the total was down 8% year-on-year.
With further interest rate hikes likely, first-time buyers are continuing to protect themselves by locking in a repayment rate.
The survey revealed that 88% of maiden homebuyers chose a fixed-rate mortgage during the month - the highest proportion ever recorded. For all buyers fixed deals grew in popularity in March, accounting for a record 78% of all loans, up from 75% in February.
Michael Coogan, director general of the CML, said: "With a rise in interest rates widely expected later this week it is encouraging that those first-time buyers who are getting a foot on the property ladder are opting for fixed-rate products.
"Affordability constraints continue to be a barrier to home ownership for many first-time buyers. Mortgage lenders are trying to help by offering innovative products where appropriate but will want to ensure lending remains prudent."
These news feeds are provided by an independent third party and Channel 4 is not responsible or liable to you for the same.
It means that the proportion of first-time buyers' salary consumed by mortgage payments is at its highest level since 1991, records show.
The CML also revealed that the size of loan compared to salary has edged up in the face of high house price inflation. First-time buyers in March took out a home loan that was on average 3.31 times their income, up from an income multiple of 3.15 in the same month in 2006.
The increasing costs of home ownership is clearly deterring many potential first-time buyers from entering the market, the lenders' association said.
Although the number of maiden homebuyers increased in March to 33,100 from 26,100 in February, the total was down 8% year-on-year.
With further interest rate hikes likely, first-time buyers are continuing to protect themselves by locking in a repayment rate.
The survey revealed that 88% of maiden homebuyers chose a fixed-rate mortgage during the month - the highest proportion ever recorded. For all buyers fixed deals grew in popularity in March, accounting for a record 78% of all loans, up from 75% in February.
Michael Coogan, director general of the CML, said: "With a rise in interest rates widely expected later this week it is encouraging that those first-time buyers who are getting a foot on the property ladder are opting for fixed-rate products.
"Affordability constraints continue to be a barrier to home ownership for many first-time buyers. Mortgage lenders are trying to help by offering innovative products where appropriate but will want to ensure lending remains prudent."
These news feeds are provided by an independent third party and Channel 4 is not responsible or liable to you for the same.