Mortgage News First Time Buyers Struggle To Enter Mortgage Market Despite Price Decline 1695
First-time buyers struggle to enter mortgage market despite price decline
04 June 2008 / by Joy Tibbs
Hometrack’s research, carried out by professor Steve Wilcox from the University of York, reveals that 28 per cent of UK workers are unable to buy even the cheapest available local properties. Unsurprisingly, those living in London are experiencing the most trouble, with those in the south west also struggling more than most to enter the mortgage market.
According to the report, 41 per cent of those in London and 40 per cent of people in the south west continue to be priced out of the market. Meanwhile, those in the north east are in the best position, with just 17 per cent unable to afford to buy a property.
However, the house price descent has been welcomed by thousands of prospective first-time buyers, many of whom had previously been priced out of the market entirely. The report indicates that if, as some experts are predicting, house prices fall 10 per cent, one-fifth of these will be able to buy a home with either two or three bedrooms.
But those looking for cheap mortgage deals are likely to find themselves disappointed. The study shows that mortgage costs rose 12 per cent, on average, in 2007, with the percentage of salary used up on mortgage repayments rising to 35 per cent.
Professor Wilcox said: “While house prices are falling, access to the property market is being increasingly limited by the costs and more restrictive terms of a substantially reduced supply of mortgage finance.
“Without further measures to restore the availability and accessibility of mortgage finance there is the risk of a severe downturn, with all the harmful consequences that this entails.”
Director of research at Hometrack, Richard Donnell, said that: “The reduction in maximum loan-to-value ratios to 90 per cent has increased the cost of getting on the housing ladder by an average of £10,000.
“Until such time as mortgage rates start to fall then lower house prices will be the only real driver of improved affordability for first-time buyers.”
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