First-buyers getting higher mortgages
Posted: 09 Aug 2006 10:39:03 GMT
On average first-time buyers were borrowing 3.21 times their income to get a mortgage in June, new figures show.
Research from the Council of Mortgage Lenders (CML) shows that people are borrowing more money than ever to get on the house ladder. The ratio of loans to salaries is increasing month on month as buyers have to continually borrow well above their income.
In May buyers had to borrow 3.20 times their income on average to get a mortgage and this year's June figure is higher than at the same point last year when the average stood at 3.06.
Despite this the number of first-time buyers in the market-place also increased. The number of new buyers taking out a mortgage increased from 34,800 in May to 39,500 in June. This is the largest amount of first-time buyers since December 2002 when there were 44,000 new buyers on the property ladder.
Christopher Dean, spokesperson for CML, stated: "The average first time buyer income multiplier nationally stands at 3.21 so what we are seeing is while affordability issues become more acute we are actually finding more first time buyers getting on the property ladder.
"We are actually seeing a record number of first time buyers on the property ladder since December 2002. So that is showing young people are finding a way to get onto the property ladder whether that's by clubbing together with friends, through the help of their family and even their grandparents."
It appears that despite the need to borrow more money and pay back higher rates of interest on variable rate loans; first-time buyers are still desperate to get into the property market.
However buyers still outweigh sellers and the demand for affordable housing is pushing prices up. CML are calling on the government to work with the industry to increase the levels of affordable new homes.
"Many first time buyers are too constrained by affordability issues and they can't rely on the help of their families or friends and so the government has to come up with ways to get people on to the property ladder," Mr Dean added.