High interest rates have begun to put pressure on prospective home owners, and banks are taking a closer look potential customer’s finances to see if they will be able to afford any more interest rises, many suspect a further rate hike in August.
House prices are continuing to soar as new home building slows and the number of affordable property on the market decreases. Typically first-time buyers have to borrow almost three and a half times their annual income, with interest payments also eating into their incomes. The growing cost of home-ownership is now deterring many prospective first-time buyers, who previously may have tried to get on the property ladder. Over the past twelve months the average home has accumulated £17,000 in value.
Those who do want to get on the property ladder are increasingly turning to family for financial assistance. Over a third of young first-time buyers say they would need help to be able to get on the first rung of the property ladder. A survey from the Council of Mortgage Lenders found that forty percent of young home-buyers said that they expected financial help from their parents. The survey also found that twenty three percent of buyers now on the property ladder got financial help from their mum and dad. This figure rises to thirty nine percent among the under thirties, and up to seventy six percent for the under twenty fives.
But it’s not all doom and gloom for would be home owners. With such a competitive market mortgage lenders are now becoming more "creative" in the mortgages they offer to first-time buyers.
The on-going struggle of first time buyers to get that first foot on the property ladder is well known and mortgage lenders have capitalised on this with products such as one hundred percent, graduate and interest free, often, though not exclusively, aimed at first time buyers. Many more lenders are now increasingly conscious of the plight of first time buyers, offering more "innovative" mortgage options to suit the needs of people entering the housing market for the first time.
James Quinton is a writer based in the UK. He has had articles published worldwide. Compare mortgage rates online.
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