First-time buyers borrowing more than they can repay: CML |
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Published
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Wed, 13 Sep 2006 21:10
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LONDON - First-time buyers are facing a crisis as they borrow over 3.24 times their incomes to fund their homes, figures compiled by the Council of Mortgage Lenders (CML) revealed.
These figures for the month of July show that a first-time buyer took out a mortgage of £110,000 or 90 percent of the value of property they were buying. CML said that while the income for a first-time buyer has increased from £32,285 to £34,216 since July 2005, the average amount for a mortgage has also risen by more than £10,000 during the same period.
"First-time buyers are continuing to find ways of getting a toehold on the property ladder, showing just how popular home-ownership is to many young people," said Michael Coogan, director general at the CML. "But higher income multiples, coupled with higher interest payments as a proportion of income, suggest that they are continuing to stretch themselves to do so."
These new figures follow on the heels of a report by Citizen's Advice, which said that 770,000 Britons were defaulting on their mortgage repayments. Drew Wotherspoon of John Charcol, the UK's leading independent mortgage adviser said both sets of figures were concerning, "A mortgage is the largest financial commitment most people are ever likely to make and they should always seek professional advice on what they can and cannot afford before taking a home loan out," he said. "Carefully considering every eventuality is an important process, which allows borrowers and lenders to determine the appropriate level of repayments."
The CML figures also showed that monthly payments on mortgages for first time buyers increased to 16.7 percent of their income in July.
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