First-time buyers spend 40% of salaries on mortgages
Published On 25 January 2007
Firsrung, the UK's leading mortgage packager and distributor, revealed today that it is seeing larger proportions of first-time buyers' salaries going towards paying off their mortgages. Paul Holmes, a spokesman for Firstrung commented: "I would estimate that the first time buyer is looking at somewhere around 40 per cent of net income to pay the mortgage."
Mr Holmes said the news could set alarm bells ringing, particularly as the last time the percentage of take-home pay hit the same level was in the early 1990s when there was "the last severe price correction".
On a more positive note, he revealed that first-time buyers are generally financially realistic and aware of the implications of taking out a mortgage.
Asked whether he believed that first-time buyers have realistic expectations when looking to get onto the first rung of the property ladder, Mr Holmes replied: "Yes they do for the most part.
"Of all the applications we receive I would say 95 per cent of the mortgage applications that we process are below £150,000, which would suggest to me that the average first-time buyer's expectations are very reasonable."
Firstrung has recently expressed its confidence that the housing market will not suffer from a drastic price reduction, citing the current excellent communication between borrowers and lenders.
