First time buyers hit by interest rate hikes
Published On 24 January 2007
First time buyers are expected to see their spending power severely limited over the coming year following the latest of three interest rate rises in the past six months.According to research by the Royal Institution of Chartered Surveyors, affordability levels are now at their worst point since 1992, causing many first time buyers who have got a foot on the property ladder to fall behind in their payments.
Meanwhile, many aspiring first time buyers are expected to have to wait a while longer until affordability improves.
David Stubbs, an economist at the Royal Institution of Chartered Surveyors, commented: "January's surprise interest rate rise is likely to soften new buyer enquiries in the coming months but those buyers who have already taken the housing market plunge could find mortgage companies knocking at their doors in the near future as affordability conditions bite."
As conditions for first time buyers worsen, buy to let investors are expected to see increased clamour for their properties over the coming year, as more people reconcile themselves to renting.
Interest rates now stand at 5.25 per cent following three quarter point hikes since August.
