The Council of Mortgage Lenders (CML) said first-time buyers in April were paying 18.7% of their income to cover mortgage interest payments. Moreover, in the East Midlands where the average salary is significantly lower, first-time buyers are paying 35.2% of their income to service mortgage debt.
This represents the highest level since 1992 and is up from 16.3% for the same period a year ago. Home movers are also finding conditions tougher than they have since the early 1990s, paying an average 16.3% of their income to service mortgage interest costs in April.
The research also found that the majority of buyers - both first-time and movers - are still opting for the security of fixed-rate deals. In April, 88% of primary buyers and 72% of home movers opted to lock in a rate for a set period. Overall, fixed-rate deals accounted for 78% of all loans. Mervyn King, the Bank of England’s Governor advises,
“It is unwise to borrow so much that the repayments are affordable only if interest rates remain at their initial levels.”
This would indicate his intention on increasing rates further. However, 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.
Sell And Rent Back can assist with home owners who are experiencing difficulties in paying their mortgage and provide a personal, tailored solution. Yaz is the founder of SellAnd-RentBack.co.uk. The site is to help those who wish sell their house quickly, professionally and with minimum hassle.
Sell And Rent Back help hundreds of people across the UK in financial difficulty, and also helps home owners to achieve a quick sale if debt becomes excessively bad. http://www.SellAnd-RentBack.co.uk Copyright 2007
