First-Time Buyers Hit Hard By Credit Crunch
Recent Surveys show that as a result of the credit crunch first-time buyers are finding it increasingly more difficult to get on board the property ladder. Not only is it due to the staggering rise in UK house prices over the past decade but also the fact that mortgage lenders are now reducing the amount they are prepared to lend as part of their tighter lending conditions.
According to the Royal Institute of Chartered Surveyors (RICS), in the last quarter of 2007 first-time buyers required more than 100% of their income in order to make a purchase. With mortgage lenders demanding even higher deposits as the credit crunch continues to take effect, many first-time buyers are becoming more and more priced out.
David Stubbs, Senior Economist for RICS said, "First-time buyers are finding it even harder to get a foothold on the housing ladder and the signs are that conditions are unlikely to get better in the short term."
It has long been stated that the red-hot housing market would cool down and affordability constraints would eventually take their toll on the overall trend of the property market, particularly for those stepping out into the home owner front for the first time. Last year's interest rate rises which saw the base rise as high as 5.75%, only added to the dilemma.
However, RICS maintains that with the steady rise in wages, mortgage payments were becoming more affordable for existing home owners in the final quarter of 2007; the first time since early 2006. It believes that mortgage affordability hit a 16 year low in the third quarter.
Senior economist Stubbs went on to say, "Those who are struggling with mortgage repayments are faced with paying a large percentage of take home pay but there may be a release of pressure as earnings continue to rise."
Thursday the 7th of January Bank of England dropped the base rate to 5.25%.
Published on February 8, 2008
Digg | 
del.icio.us | 
StumbleUpon | 
Reddit | 
Yahoo! | 
My favourites
Latest Finance Articles
Darling's Budget Report Highlights
Chancellor Alistair Darling delivers his first Budget Report yesterday. Highlighted in this article are some of the main points... Read More
March 13, 2008
Lending Falls Again Says CML
The amounts borrowed by first-time buyers and home movers continue to drop as the credit crunch takes further grip on the UK mortgage market. Remortgage activity is on the increase as many switch from fixed-rate deals to tracker mortgages in anticipation of further base rate decreases from the Bank of England... Read More
March 12, 2008
10 Tips To Improve Your Credit
Now more than ever our credit rating affects our ability to borrow credit. Here are 10 tips to help you improve your credit score... Read More
March 7, 2008
Interest Rates Kept At 5.25%
Yesterday, 6th March, the MPC decided to keep the base rate at 5.25 per cent. This decision was to be expected as the Bank focuses on the pressures of rising inflation and a slowing economy. Analysts are predicting another cut to 5 per cent to happen in May unless economic conditions weaken substantially. Whilst some feel the MPC shouldn't wait too long before the next cut, many agree with yesterday's decision... Read More
March 7, 2008
20 Per Cent Of Homeowners Fear Repayments
The UK's financial watchdog, the FSA, published a survey of over 500 mortgage holders which revealed 1 in 5 are worried about being unable to keep up with their mortgage repayments. It is estimated that 1.4 million fixed-rate or discount deals will expire this year raising monthly repayment amounts. Twenty five per cent of those surveyed admitted they had no contingency plans to meet these costs... Read More
March 6, 2008
Refer a Friend
Why not tell a friend about Money Outlet? Click here
