Hard times ahead for first-time buyers
A first-time buyer couple on a low-income must save a years take-home pay to buy their first home, say surveyors.
A couple in the bottom quarter of earners in the United Kingdom needs £27,738 to pay in advance fees, according to the Royal Institution of Chartered Surveyors.
Affordability has improved for those who are able to get on the housing ladder, the group said.
But the credit crunch has made it more difficult to climb the first rung.
“Access to the housing market has deteriorated as the credit crunch seized mortgage lender sector,” said RIC’s senior economist David Stubbs.
“With the decline in mortgage approvals, the situation does not look like improving in the latter part of 2008 and first time buyers will find their path to homeownership increasingly blocked.”
Mortgage Costs
Mr. Stubbs said that those who are able to find a larger deposit to benefit from a reduction in mortgage repayments as a result.
But he added that rising fuel and food bills means that household finances would remain strained.
The Council of Mortgage Lenders said that in May the average first time buyers mortgages stood at £113,500.
Rics believes that a low-income couple jointly earning £27,316 per annum after taxes, would need all of this for expenses such as a deposit and fees on a first home.
This was much higher than the 21% of their income they would have needed to get on the property ladder in 1996.
London is the most difficult area to enter the real estate market to low-income couples, followed by the south-east, east and south-west of England.
Scotland and the north-east and north-west England are most accessible.
Affordability
Larger deposits and the decline in prices means those low-income couples who have one foot was found that affordability has improved in April to July this year.
They should spend 34.5% of their take-home pay on mortgage repayments, down from 37.2% during the first three months of the year and lower than the record level of 46.5% at the end of 1989.
The figures come as Woolwich - the mortgage arm of Barclays - cut part of its fixed-rate mortgage deals by up to 0.3%.
Broker John Charcol also unveiled a two-year follow-up to deal with high-value mortgage loans with a record fee provision of up to £137,500.
Borrowers are offered an interest rate of 0.01% below the Bank of England base rate, available on mortgages between £ 500000 and £ 5m, but they must pay a fee arrangement 2.75% of the amount borrowed.
