First-time buyers gain affordability
Affordability for first time buyers (FTBs) in the property market is now at its best level since 2004, according to the Halifax and the Council of Mortgage Lenders. The CML reckons the average FTB purchase in March was with a loan of three times income for 75% of the purchase price, and on typical interest rates, loan repayments accounted for 15% of the borrower’s net income. Many lenders use 30% as the maximum percentage of net income a borrower should apply to mortgage repayments, so it looks as if FTBs are now well placed- provided they can secure a mortgage. That is still not so easy.
Newspapers have continued to carry stories from would-be buyers unable to obtain loans, but banks claim there is money available provided borrowers fit their criteria. The big banks in particular – HSBC, RBS and Lloyds TSB – all claim to be lending more than they were last year.
Most buyers will just be glad that interest rates are reasonably low, but with government spending at unsustainable levels, there are growing risks that inflation will rev up again in a year or two. So there’s still a good case for getting a fixed-rate loan, especially if a rise in monthly repayments would cause you difficulties.
