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First-time buyers borrowing more than 3 times salary

19 January 2007
First-time buyers are borrowing record sums compared to their salaries to meet soaring house prices, statistics from the Council of Mortgage Lenders (CML) show.

The average first-time buyer 'income multiple' - the amount taken out in a mortgage measured against household income – is now 3.29 times household earnings.

In 2006, the equivalent figure was 3.08 times household earnings.

Moreover, stamp duty hit 56 per cent of first-time buyers in November 2006 compared with only 48 per cent a year earlier.

"Month on month, we see affordability constraints becoming more pronounced for first-time buyers," Michael Coogan, the CML's director general warned.

Nevertheless, the number of loans going to first-time buyers rose from 35,300 in October to 37,000 in November 2006.

Mr Coogan stressed that "anyone wanting to buy their first home should look carefully at their finances and take a realistic view as to whether they can afford the costs".

A recent Royal Institute of Chartered Surveyors study found that the average two-person household has to save 82 per cent of joint take-home pay to afford a first home.

For more information about first-time buyer mortgages, click here.

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