First-time buyers 'pay more for mortgages'
Published On 12 June 2007
Increasing interest rates mean that first-time buyers are having to pay more to be able to afford their mortgage, a new report suggests.Figures released by the Council of Mortgage Lenders (CML) show that first-time buyers had to pay 18.7 per cent of the income servicing their mortgage in April - compared to 16.3 per cent in the same month in 2006.
The CML noted that this data did not take into account May's interest rate increase, meaning that first-time buyers are likely to have to spend even more in the future.
"Month on month we see affordability constraints for first-time buyers worsening. And with the impact of May's interest rate rise still to be felt, many borrowers face higher costs in the coming months," explained the CML's director general, Michael Coogan.
"The vast majority of borrowers will be able to absorb higher mortgage payments.
But with two million fixed-rate loans coming to an end over the next year and a half, many borrowers should anticipate that their mortgage costs are likely to rise and should be planning ahead."
Commenting on the data, Oliver Gilmartin, the Royal Institution of Chartered Surveyors' (Rics) chief economist, said: "The threat of further interest rate rises has clearly hit home for those buying their first property.
"With affordability the worst in over a decade and some homeowners fearing the end of current fixed rate arrangements, holidays at home may be all the rage this summer."
